Mom and Dad Loans for Millennial Homebuyers
Younger homebuyers – aka, millennials – have had quite the setback when it comes to buying homes; this news hasn’t been all that surprising considering their place in student debt and rising mortgage rates.
But it looks like mom and dad have stepped in to help them achieve a major milestone.
More than 26% of mortgage borrowers who used Federal Housing Administration-insured loans received assistance from a relative to make a down payment – up from 22% in 2011.
FHA loans are predominantly used by those buying homes for the first time; first-time borrowers with weaker credit profiles seek out this government assistance when they cannot obtain a conventional loan. Conventional loans, for the most part, can require buyers to put down as much as 20% of the purchase price upfront, whereas FHA buyers can pay as little as 3.5%.
With the median home value in the U.S. at $221,500 this past November, it becomes easier to understand why these millennial homebuyers are needing the additional help – especially when statistics point out that the median price is 8% higher than last year and 25% higher than a decade ago.
As the real estate market enters 2019, analysts and economists alike will be viewing the millennial home buying trend with a keen eye.
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