Younger would-be homebuyers are moving back in with their parents: Should you?

Today’s higher home prices and interest rates have raised the barrier of entry for would-be homebuyers. With the down payment one of the biggest hurdles, some younger millennials and Gen Z have turned to moving in with family to help save. Here, we take a closer look at the trend and offer ways to help navigate a return back home.

Key statistics

Why are younger generations moving back in with parents?

While factors like limited housing options and too much debt have plagued homebuyers for years, younger aspiring homebuyers face a tougher road financially compared to even a few short years ago.

Today, affording a home at the national median price requires an annual income of $110,871, a 46 percent increase from 2020, according to a 2024 Bankrate analysis. Americans in 22 states and Washington, D.C., would need an annual salary of over $100,000 to afford a median-priced home in their state. Currently, the typical U.S. household has an income of $96,300.

For first-time homebuyers, those income needs have increased, as well. The typical first-time buyer in 2023 had an income of $95,900, according to NAR, compared to $71,000 in 2022.

At the same time, the national median home sale price has risen 28 percent, from $329,000 in the first quarter of 2020 to $420,800 in the first quarter of 2024.

Add in higher 30-year mortgage rates, which went from roughly 3.3 percent in 2019 to more than 7 percent currently, and it’s easy to see why one-fifth of aspiring homebuyers (20 percent) believe they’ll never be able to save enough for a down payment on their home, according to a 2024 Bankrate survey. In that same survey, 16 percent of younger millennial homeowners and 17 percent of Gen Z homeowners reported moving in with family or friends to cut down on expenses as a way to save for a down payment and closing costs.

“A buyer needs a six-figure income to qualify for a mortgage on a median-priced home,” says Jeff Ostrowski, Bankrate principal writer. “So, it makes sense that workers in their 20s are looking for ways to cut their housing costs as they prepare for homeownership.”

Past homebuyers have returned home, too

It’s not just aspiring homeowners living with their parents. Kevin and Katelynn Behan, both 31, of New Jersey, were homeowners planning to trade up to a bigger place in a few years — until a new development and road construction sped up the timeline. The last thing they wanted to do was try to attract buyers when workers were building high-rises across the street and widening the road.

Their solution: Sell the home now and live with Kevin’s parents while they save up for a bigger home.

“We were like, ‘Let’s sell the house, because we can do well on it and have a nice little nest egg to save off of, if my parents are willing to take us in,’” says Kevin Behan. “And they were.”

So, in March 2024, Kevin, Katelynn and their three daughters moved into Kevin’s childhood home. Although it’s been an adjustment, they’re grateful for the opportunity to pay off debts and save more for their new home.

Still, they’re not sure how long they’ll stay.

“Kate thinks a year. I think it’s going to be more than that,” says Kevin. “We have three girls and we want to have another kid. We just came here to save more money so we could upsize our house a bit [and] maybe get a little bit better of a location.”

Should you move back in with your parents to save for a house?

If you’ve been renting but want to buy a home, you might be able to save for a down payment faster by moving back in with your parents or another relative. If your family’s willing, consider:

• Will you contribute financially? Moving back in doesn’t necessarily mean free room and board. Many parents ask their children to contribute to living costs or pay rent. If you agree to whatever financial terms they set, how will it affect your ability to save for a down payment?
• What’s your timeline? Will your parents’ home be open to you indefinitely? Do they plan to sell their home soon? Based on your homebuying budget, how long would you need to live there to save for a minimum down payment? It’s crucial to have these conversations before you move in.
• How’s your relationship with your family? Are you close (or too close) to your family? Would living with them again change your relationship for the worse? Consider whether the upside — saving money — outweighs any cons in terms of your mental health and family relationships.
• Will your lifestyle clash with theirs? “My mom keeps a clean house,” says Behan, who’s had to put in extra effort to tidy up messes promptly since moving in with his parents. Ask yourself: Do you and your family share similar boundaries regarding cleanliness, noise and privacy? Will your parents allow you to invite friends over (and, if not, is that a deal-breaker)?
• Can your family help another way? If moving in with your parents isn’t an option, they might still want to help by contributing down payment gift funds. If you go this route, make sure they write a gift letter and you put the money in your bank account at least two months prior to applying for a mortgage.
• Do you qualify for down payment assistance? If you’re a first-time homebuyer or have a moderate to lower income, you might qualify for down payment assistance loans or grants. These programs could help you get into a home sooner — and without resorting to moving back home.
• Can you cut rent costs? If you’d prefer your own place and have some flexibility, there are ways to save on rent, including getting roommates or moving to a more affordable area.
• Are you willing to wait? If you’re early in your career, you might consider holding off buying a home for a few years until you’re earning more money. This’ll also give you more time to grow your credit history and increase the amount of home you can afford.