Report: Millennials And Gen Zers Plan To Use Family Money To Buy Homes

More than a third of millennials and Gen Z who are looking to buy a home in the near future are planning to do so with family money, according to a recent report from Qualtrics, commissioned by real estate website Redfin.

More than 3,000 U.S. homeowners and renters were surveyed, and roughly 16% of millennials and GenZers said they plan to use an inheritance to help fund their down payment. Thirteen percent said they plan to live with their parents or other family members instead of buying or renting, the report said.

Not all millennials and GenZers plan to use family money to purchase homes: 60% said they plan to save up for their down payment with their paychecks, and 39% said they would likely work a second job to save up.

In 2019, only 18% of millennials use family money to help fund their down payment, according to a previous Redfin survey, and only 23% said they planned to do the same thing in 2023, the report said.

The report cited an increasingly difficult financial landscape faced by millennials and GenZers as a potentially contributing factor: wages are lower than their parents’ were at the same age, they have more student loan debt, and inflation has increased the cost of most things, including housing.

Additionally, a separate Redfin analysis showed that starter homes are also getting more expensive, pricing many in the U.S. out of being able to buy their first home.

Because of this challenging financial landscape, 43% of millennials and GenZers say they are unlikely to buy a home soon, because the houses are too expensive. One third (34%) said their ability to save for a down payment is a barrier to buying a home. Other contributing factors against being able to buy a home were identified as inability to afford mortgage payments (29%) and high mortgage rates (29%).

If you’re a millennial or GenZer considering starting the homebuying process, here are a few tips to help you get started.

Start saving: If you can, start saving as early as possible for your down payment and other costs, NerdWallet says. A homebuyer will need to have funds for the down payment, closing costs, and move-in expenses, plus a little wiggle room in case something goes wrong or the process takes longer than you expect.

Set your budget: Millennials and GenZers in the report cited concerns that they wouldn’t be able to afford a mortgage, and that is a real consideration that is factored into the homebuying process, according to Nerdwallet. Start by finding an online home affordability calculator, which can help you set a price range for the amount you can afford to pay each month and can help you figure out what you might be able to afford for a down payment based on where you live.

Improve your credit: Your credit score determines whether you can qualify for a mortgage and often dictates what your interest rate will be from your lender. A higher score will typically put you in a better position to have a lower rate, making your home more affordable overall. Nerdwallet suggests getting free copies of your credit report from Experian, Equifax and TransUnion, paying bills on time, keeping current credit cards open and avoid opening new credit accounts while you’re in the process of applying for a mortgage.