The “Bank of Mom & Dad” Is Back; 3.3% of Young Buyers Now Co-Apply With Someone 55+; Why This Can HELP — or HURT — a Mortgage

October 27, 2026 | Michael Belfor

Buying a home is getting so expensive that more younger buyers are bringing Mom and Dad into the mortgage.

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A new Rocket analysis found that 3.3% of homebuyers under age 35 co-applied for a mortgage with someone over age 55 in 2025.

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That was up from 2.5% in 2019. Barron's

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And NAR says first-time buyers now make up just 21% of all purchases — the lowest share it has recorded since 1981. National Association of REALTORS®

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Translation:

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The “Bank of Mom & Dad” is not just helping with down payments anymore.

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Parents are increasingly helping buyers qualify.

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And that can be a very smart strategy.

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Or a very messy one.

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I. FIRST, FIGURE OUT WHAT PROBLEM YOU ARE ACTUALLY SOLVING

This is where families often jump too fast.

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There are usually two completely different problems.

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Problem #1:

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The buyer has enough income to qualify, but not enough cash for the down payment and closing costs.

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That is a cash problem.

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Problem #2:

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The buyer has savings, but their income is not strong enough to qualify for the mortgage they need.

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That is an income problem.

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Those require different solutions.

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If the issue is cash, adding Mom or Dad to the mortgage may be unnecessary.

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A documented gift may solve it.

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If the issue is income, a non-occupant co-borrower or co-borrower may help — depending on the loan program.

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Do not use a complicated solution for a simple problem.

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II. A GIFT CAN BE MUCH CLEANER THAN ADDING A PARENT TO THE LOAN

This surprises a lot of buyers.

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Under Fannie Mae guidelines, gift funds from an acceptable donor can be used for some or all of the down payment and closing costs on an eligible primary-residence purchase, subject to the program and transaction. Fannie Mae

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For a one-unit primary residence, there may be no minimum contribution required from the borrower’s own funds. Fannie Mae

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That means a qualified buyer could potentially receive the entire down payment as a documented gift.

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The important word is:

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Documented.

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Mortgage lenders need to know where the money came from.

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A gift letter generally confirms the amount, the donor relationship, and that repayment is not expected.

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The transfer also needs a clean paper trail. Rocket Mortgage

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So please do not have Dad hand you $75,000 in cash two days before closing.

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That creates a different kind of family memory.

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III. CO-BORROWING CAN HELP — BUT MOM AND DAD ARE NOW IN THE LOAN TOO

Sometimes gift funds are not the problem.

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Income is.

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That is when adding a parent as a co-borrower may help.

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Their income and assets may strengthen the file depending on the loan program and underwriting.

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But this is where families need to slow down.

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If Mom or Dad signs the note, this is not ceremonial.

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They are legally obligated on the mortgage.

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The debt may appear on their credit.

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It may affect their ability to qualify for another mortgage or loan.

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And if payments are late, their credit can be affected too.

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So when someone tells me:

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“My parents can just co-sign.”

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My answer is:

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Maybe.

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But let’s understand exactly what that means before we do it.

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IV. SOMETIMES THE PARENT SHOULD NOT BE ON THE LOAN AT ALL

Here is another mistake I see.

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Families assume that because a parent is providing money, the parent needs to own part of the house or be on the mortgage.

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Not necessarily.

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A parent may be able to provide gift funds without being a borrower.

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And depending on the transaction, keeping the structure simpler may be better.

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The right answer depends on:

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The buyer’s income.

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The buyer’s credit.

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The amount of the gift.

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The loan program.

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Occupancy.

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Property type.

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And the parents’ own financial goals.

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If Mom and Dad are nearing retirement, I am especially careful about adding a large new liability to their credit unless it is truly necessary.

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Helping your child buy a home should not accidentally damage your own retirement plan.

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V. THIS IS BECOMING A BIGGER DEAL IN CALIFORNIA

The national numbers are interesting.

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California makes the issue even more obvious.

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In the Bay Area, Orange County, Los Angeles and San Diego, the problem is often not that the buyer earns too little in absolute terms.

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It is that the house costs so much relative to income.

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A buyer can earn what would be considered an excellent salary almost anywhere else in the country and still struggle with:

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The down payment.

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The jumbo loan amount.

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The monthly payment.

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Property taxes.

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Insurance.

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HOA dues.

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And reserves.

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That is why family assistance is becoming part of the financing conversation more often.

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Not because every younger buyer is financially irresponsible.

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Because the math has changed.

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VI. THERE ARE MORE THAN TWO WAYS TO HELP

The family conversation does not have to be limited to:

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“Do we give them money?”

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or

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“Do we co-sign?”

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Depending on the situation, families may consider:

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Gift funds.

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A gift of equity.

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Co-borrowing.

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Helping with reserves.

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Helping pay closing costs.

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Providing earnest money.

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Buying the property together.

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Or helping the buyer reach a lower loan amount.

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Each option affects qualification, taxes, ownership and family finances differently.

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That is why I would structure the mortgage first — before moving money around.

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THE BOTTOM LINE

More young buyers are using family help to get into homes.

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Rocket found that 3.3% of buyers under 35 co-applied with someone over 55 in 2025, up from 2.5% in 2019. Barron's

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And first-time buyers now represent just 21% of the market. National Association of REALTORS®

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That tells you how difficult affordability has become.

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But “Mom and Dad can help” is not a mortgage strategy.

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The real questions are:

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Is the problem cash or income?

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Would a gift solve it?

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Does the parent actually need to be on the loan?

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What happens to the parent’s credit and borrowing capacity?

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And does the structure still leave everyone financially comfortable after closing?

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Family help can absolutely make homeownership possible.

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Just structure it correctly.

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Because the goal is to help your kids buy a house.

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Not accidentally become their mortgage company.

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ABOUT MICHAEL BELFOR

Michael Belfor is a Branch Manager and Loan Originator with American Pacific Mortgage, bringing approximately 24 years of mortgage lending experience.

An APM President’s Club and Top 1% originator since 2017, Michael helps homebuyers, homeowners, real estate investors and real estate professionals navigate conventional, jumbo, FHA, VA, Non-QM, DSCR, TIC, condo, construction and other mortgage financing solutions.

California first-time homebuyer financing, Bank of Mom and Dad mortgage help, gift funds for down payment, non-occupant co-borrower, parent co-signer mortgage, California jumbo loan, Bay Area first-time buyer, Orange County homebuyer assistance, mortgage gift funds, family-assisted home purchase.