Taking on a Mortgage (and Living) with Your Parents: Tips for Success

November 5, 2019

3 minute read

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Within the past couple of years, there has been a noticeable shift in the real estate industry, with more and more Americans choosing to live in multi-generational housing. And today’s lenders are taking notice, striving to make it easier for these families to secure a mortgage.

For generations, most American homes have been made up of “nuclear families,” or parents and their children. However, as Baby Boomers continue to age and require more care, we are seeing a new group emerge, known as the “Sandwich Generation.” Just as the name suggests, this generation is sandwiched between caring for their children and simultaneously caring for their aging parents.

It is estimated that 20 percent of Americans today live in a multi-generation home, with at least two adult generations living in the same home — up from just 12 percent in 1980. However, buying a house for this type of family unit can be tricky, especially if the older generation(s) will be renting from the younger one.

Typically, a house with a rental unit for parents is considered to be an investment property, which can require a larger down payment with a higher interest rate. However, as the trend is becoming more popular, banks and other lenders are working to change their practices, aiming to make the process smoother for everyone involved.

Multi-generational housing comes with its own unique set of challenges and opportunities. With this in mind, let’s take a closer look at these tips for success in taking on a mortgage and living with your parents.

#1. Make sure everyone has their space

This can look different for every family. Many multi-generational homebuyers are looking for homes that offer space and privacy for everyone. Sometimes that can mean looking for a spacious layout that features two master suites. When it comes to multi-generational housing, the home’s layout and floor plan often seem to trump other amenities.

#2. Get creative to suit your family’s needs

Don’t be discouraged if you can’t find a home that meets all of your family’s needs as is; rather, get creative in making the space your own and find ways to make it work for you. Consider converting a detached garage into a separate master suite and adding a breezeway, or turning a rarely-used formal living space into a functional bedroom.

#3. Location, location, location

The area in which you purchase a home for your multi-generational family is also incredibly important, especially if the older generation is still active. Living close to town allows the older generation(s) the ability to still get out and about, to easily run errands or take a trip to the grocery store. This allows for feelings of autonomy and independence, leading to greater satisfaction. Making sure the neighborhood is a good fit for everyone can go a long way toward creating harmony in the multi-generational home.

#4. Remember that you’re all adults

This one can be tricky, but it is so important. Always remember to treat everyone as adults, and try to avoid any paternalism. In order for this type of dwelling to work, it is important that your parents be able to recognize you (and your spouse, if applicable) as independent adults. Conversely, you will also need to remember to treat your parents with dignity and respect, and also allow them some autonomy.

Of course, despite all of the tips and tricks, sometimes this style of living just doesn’t work out for everyone. However, by making sure that everyone has a place to call their own, getting creative with your space if necessary, and moving to a great neighborhood can help to ensure your success in multi-generational housing.

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