Survey: Most Boomers Would Cover Kids' Down Payment

Baby boomers may be in a better position than most to buy homes, but not before helping Junior out of a bind. A national survey found that at least two-thirds of boomers age 45 and up want to help their children or grandchildren with a home down payment.

The study, conducted by Meredith Research Solutions for Better Homes and Gardens Real Estate, polled a random sampling of 1,100 adults over 45 who had at least one child or grandchild over 18.

The results overwhelmingly show a generation that still appreciates the value of homeownership, despite their children's difficulties in the market. One in five boomers stated that they've already loaned money, co-signed a mortgage, or given a cash gift to children for a down payment. When asked why they're willing to help, 75 percent said that it was still a good investment for their children, while 58 percent still think that homeownership is part of the American Dream.

And it's not just wealthier boomers who hold these beliefs. While the study found that boomers who make more than $75,000 are the most likely to offer financial help, roughly 46 percent of those who said that they will definitely contribute to their children's home purchase made less than that. Within that group, 30 percent made less than $50,000 in household income.

For recent college graduates, the results should come as a relief. At least 41 percent of students are returning to their parents' home after graduation, saddled with huge college debt and grim job prospects. Many others opt instead to never leave the family home, either by delaying college or commuting to a local school.

But helping the kids move out sooner may come at a high cost for boomers on a fixed income. Homeowners of middle age and older typically have more equity in their home and are better candidates for reverse mortgaging. But as more of boomers' savings go toward securing their children's futures, less financing may be available for their own move. And fewer boomers moving means a smaller pool of qualified buyers.

First-time homeowners may be the future, but it's the repeat buyers who have the means to put down a substantial cash sum at closing.

And while respondents cited "love" as a top consideration in shelling out for their kin, another frequent reason is lighter on sentiment, heavy on foreboding. One in five boomers -- who said that they have helped or likely will help with a loan to their children -- said that their kids couldn't afford the home without them.

See also:
Forget Empty Nesters, We Now Have 'Full Nest Syndrome'
Will Baby Boomers Rock the Housing Market?