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#189: Using home ownership to help 3rd generation become homeowners


You have always made clear to your children that, once you’d helped them get through four years of college, they would be expected to take full charge of their own financial futures.  Apparently, your one grandchild was raised with the same expectation. In a recent discussion, though (much to your consternation), this grandson revealed that he and his new bride have no aspirations of ever becoming homeowners; they are in despair at ever being able to afford a down payment on a home in a decent neighborhood, much less one near enough to their respective jobs. 

Neither set of this young couple’s parents has offered to help (given that there are younger siblings still in high school and college), and so you would like to “step up to the plate”, convinced that home ownership is the best path towards building wealth. Your own home has appreciated considerably over the years, and you have been careful to keep it in good repair, hoping to spend the rest of your lives there. You do not know whether making a gift of the down payment is allowed, and you are somewhat concerned about depleting your own cash reserves, which you have been careful to set aside for future contingencies.

In this era of high – and rising – rents, your desire to help your grandson and his wife build equity in a home is understandable. Be assured that it is possible for the couple to use your gift of funds to make a down payment on a primary residence. Within the 2024 gift tax limit ($18,000 per donor per recipient), the two of you could certainly make a gift sufficient to fund the down payment on a starter home for the couple. Gifted funds are allowed to be used for a down payment (you might be required by the mortgage lender to sign a gift letter). You will want to be sure that the couple is able to shoulder the ongoing maintenance and mortgage costs, and that they share your vision of wealth building through homeownership.

In terms of your concern about depleting resources, you might consider accessing the equity built up in your own home in the form of a reverse mortgage. With no monthly mortgage payments, you will have a resource to tap for your own possible future needs. Meanwhile, the unused portion of your reverse mortgage line of credit will continue to grow at the same rate as the interest being charged on the borrowed funds.

You will be using your own housing wealth to help get the young’uns started on building theirs.

Readers, if you’d like to see what you might qualify for with a reverse mortgage in Indiana, or to download your Reverse Mortgage Guide Click Here(and scroll down).

Borrower must occupy home as primary residence and remain current on property taxes, homeowner’s insurance, the costs of home maintenance, and any HOA fees. Please consult a tax advisor. David Garrison, NMLS ID 1595194. Mutual of Omaha Mortgage, Inc. dba Mutual of Omaha Reverse Mortgage, NMLS ID 1025894. 3131 Camino Del Rio N 1100, San Diego, CA 92108. Indiana-DFI Mortgage Lending License 43321. Michigan 1st Mortgage Broker/Lender/Servicer Registrant FR0022702. These materials are not from HUD or FHA and the document was not approved by HUD, FHA or any Government Agency. Subject to credit approval. For licensing information, go to: | Equal Housing Lender