Buying a house with your aging parents is on the rise

Nearly one-in-six homebuyers in 2025 purchased a multigenerational home, which can mean sharing costs and space with adult children and/or aging parents. In an era when only 21% of homes are purchased by first-time buyers, an all-time low according to statistics from the National Association of Realtors, this may be the only path to homeownership for many in Gen Z and millennials.

More than two-thirds of homebuyers in multigenerational households cite costs as the primary reason to cohabitate with family.

“Utility bill fluctuations, unexpected home repairs or maintenance issues, and rising home insurance premiums all impact financial stability,” said Courtney Klosterman, home insights expert at Hippo (www.hippo.com). “When those costs are shared, the whole household feels more stable.”

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Multiple salaries help make homeownership affordable

Affordability is a key driver in buying a home with older or younger family members, especially in areas with exorbitantly high housing costs or lower-than-average wages. Klosterman said that California, Arizona, New Mexico and Texas lead the way in multigenerational homes.

“Multigenerational households report similar average incomes to other homebuyers,” she explained.

In other words, it takes the same annual income to afford a home – typically one-third of the home’s selling price – whether that money comes from one, two, or even more salaries.

“In some states where multigenerational homes are common, like California and Arizona, it takes at least three people,” Klosterman said. “Individuals who might face financial constraints on their own are pooling resources to achieve what could otherwise be out of reach. Having multiple family members contribute to housing costs can make the difference between renting and owning.”

Other advantages to buying a multigenerational home

In many cases, parents buy a home with their adult children to make housing more affordable. But there are other advantages and other reasons parents and adult children join forces to buy a home.

Transferring generational wealth cleanly

Parents often contribute to the down payment or even mortgage costs to give their adult children the income boost they need, said Nikki Beauchamp, NYRS, associate broker at Sotheby’s International Realty.

But in families with high net worth, she said, there’s another reason. “Rather than wait until there is a death for someone to inherit funds to put toward a house, it’s being done in life.”

“Individuals who might face financial constraints on their own are pooling resources to achieve what could otherwise be out of reach. Having multiple family members contribute to housing costs can make the difference between renting and owning.”

Making caregiving more convenient

While money is often a driver, there are additional advantages for the older and younger generations. Grandparents in their 50s, 60s, and 70s can help take care of grandchildren. When the time comes that the parents age and need help, cohabitating can make it easier on adult children who become caregivers, making it easier for older adults to stay in their homes longer.

“As elder care becomes a growing reality for more families, multigenerational households offer a built-in solution: older adults can receive support from family members, reducing the need for hired care or assisted living, while grandparents and other relatives can contribute to childcare,” Klosterman said.

Maintaining cultural norms and building new traditions

Multigenerational households were common in past centuries. Today, finances may force some families together, but traditions are equally important.

“For many families, living together across generations isn’t a financial decision, it’s a reflection of values,” Klosterman said. “Living together is seen as both a family responsibility and source of connection.”

Considerations before signing off on a shared space

Buying a home with your adult children isn’t like taking a multigenerational vacation, although the challenges of shared space and shared expenses come up in both situations. More than one-quarter (26.4%) of people in multigenerational homes reported privacy concerns, according to a report from Rocket Mortgage. according to a Rocket Mortgage report.

Other problems can arise from splitting costs. Fortunately, both have solutions – and communication is key.

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Discuss shared space and privacy needs

Choosing a home that can fit everyone comfortably, with private places for family members who may work from home or need a space to get away from a busy household, can make it easier.  Talking it out beforehand to address problems before they arise can also help.

“When families communicate expectations from the very beginning, it vastly improves their functionality. Problems such as privacy, common areas, houseguests, noise, and splitting costs cause tension much more than the mortgage,” said Ryan Fitzgerald, owner/broker at Raleigh Realty.

Choose the right type of home

Finding the right type and size home can make a difference in costs and comfort, Fitzgerald and Beauchamp agreed.

Some families may opt for a mother-daughter property, which allows dual-family use and gives everyone their own private entrance, kitchen, bathroom, and the privacy that comes with these things. But make sure the house fits the legal definition.

“If adequate approvals, such as a separate entrance, kitchen, and utilities, are not in place, problems can occur when selling, appraising, or financing,” Fitzgerald said.

In New York City where Beauchamp works, she noted, cooperatives (co-ops) may have strict restrictions to house multiple families, while a condominium, single-family home, or a multi-family home won’t raise any eyebrows about occupancy. Options in nearby suburbs may not have these restrictions, she noted, emphasizing that it’s important to understand local zoning laws.

Understand legal considerations

Buying a house is a long-term decision that’s much harder to undo than a two-week vacation. It makes sense to bring in professionals to ensure a smooth transaction.

“Buying with adult children works best when the framework is determined up front. That most often requires deciding on how the title will be held, naming responsible parties for payments, and matching ownership percentages to contributions to financing,” Fitzgerald said.

Outline the exit strategy

What happens if financial circumstances change and one family or another can no longer afford the monthly mortgage payments? What happens if one of the owners dies? What if the arrangement just isn’t working out?

These are all important considerations, especially if there are other siblings involved who may believe the home equity should be part of their inheritance.

“It is vitally important for the buyers to talk with their lawyers and tax professionals, particularly in circumstances where there are multiple siblings involved. Cleanly considering what happens should either party pass away is important,” Beauchamp said.

“By drafting a written agreement that outlines exit strategies — sale, buyout, or refinancing — there is far less potential for future conflict,” Fitzgerald concluded.

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