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The millennial generation is split in 2: an older crowd with boomer-style comfort, a younger set going 'back to the early 1900s'

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The millennial generation is split in 2: an older crowd with boomer-style comfort, a younger set going 'back to the early 1900s'

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'The demographic dividend of the last 40 years is ending': J.P. Morgan says the world is running out of the two things that kept interest rates down

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Jensen Huang made his $172 billion fortune on AI chips. His family's $75 million gift to Vanderbilt argues art decides what technology is for
mortgages

More Home Buyers Are Turning to Their Parents for Mortgage Assistance

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Don Reisinger
Don Reisinger
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By
Don Reisinger
Don Reisinger
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January 4, 2019, 9:44 AM ET
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The number of home buyers turning to their parents for help in affording their houses is on the rise.

In its annual report, the Federal Housing Administration (FHA) revealed that more than 26% of people who received an FHA-insured mortgage in the 12-month period ended in September had family assistance. That was roughly the same as the prior year, but up from 22% in 2011, according to the data. The Wall Street Journal earlier reported on the jump.

FHA-backed mortgages are often used by brokers and banks that have riskier mortgage applicants. Those who are approved for an FHA mortgage often have lower credit scores or might be buying their first homes. FHA mortgages also come with lower down payment requirements, allowing borrowers to pay as little as 3.5% of a home’s purchase price to buy it.

Turning to parents or other loved ones for help is not necessarily a new practice, but it appears to be on the rise. It’s unclear from the report what might be driving the increase in family participation, but rising home costs and higher debt might be the cause. In fact, the FHA report found that its applicants had debt equal to 43% of their income. The average borrower’s credit score was 670, its lowest point since 2008.

Looking ahead, there’s no sign of those trends changing. Including family and non-family help, 39% of borrowers received some form of down-payment help in the 12-month period the FHA analyzed. In 2011, 30% of borrowers could say the same.

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