Homebuyers

Staying Home to Save: How Moving Back with Parents Can Fast-Track a Down Payment

When Danielle Hale’s roommates both announced their engagements in 2012, she found herself facing a decision. Rather than searching for a new place and shouldering the rising costs of living solo, Hale, now Chief Economist at Realtor.com, opted to move back in with her parents to the Washington, D.C. suburbs.

“I knew they’d be open to it,” Hale said. “They’d offered before and…this time it felt like the right step.”

Over the next year, with no rent to pay, she saved up steadily. She was able to come up with a 10% down payment on a condo in Arlington, Va., within walking distance of public transportation.

By moving back home and not paying rent, young adults may be able to set aside more each month for a future home. Living with family also often means saving on utilities, groceries, and other monthly costs.

This can quickly add up toward a down payment at a time when home prices are high and there is a lot of competition in the market for more affordable starter homes.

“The more I saved, the more options opened up,” said Hale. “I wouldn’t trade that time for anything. Not only did it fast-track my path to homeownership, but it also gave me the chance to know my parents as adults.”

Moving in with family and friends can help homebuyers save

These days, down payments aren’t cheap. The typical first-time buyer put down 9% of the sale price of their home, according to a recent National Association of Realtors report.

To come up with this cash, 7% of all first-time buyers moved in with family or friends without paying rent, according to NAR. That may help to erase some of the stigma that some younger adults may face when moving back in with their families.

"The more people who do this and find success with it, the more acceptable it becomes,” said Hale.

How today's first-time buyers are making it work

More than two-thirds of first-time buyers, around 69%, still rely on savings as their primary source for a down payment, according to the NAR report. But with high home prices, buyers are also getting creative.

About 21% of first-time buyers used gifts or loans from family and friends, and others are tapping into financial assets: 12% accessed their retirement accounts, 8% sold stocks or bonds, and 1% even used cryptocurrency

Despite these strategies, buying a home isn't easy.

Nearly a third, 32%, of first-time buyers said saving for a down payment was the hardest step, according to the NAR report. Many reported making sacrifices to reach their goal, often cutting back on luxuries, entertainment, and clothing—or even moving back in with Mom and Dad.

How adults can move back in with family

While moving back home offers big financial benefits, it also brings challenges around independence and privacy.

Hale recommends setting clear goals and boundaries with family to keep the arrangement positive.

"You know what adjustments to your schedule and routine you need to make to stay home long enough to make a difference in your savings and your goals," Hale said.

Hale also jokes about her parents' TV volume, suggesting that earplugs might be a good investment for anyone considering a similar move. Still, she treasures the experience.

"I'm very glad that I did," Hale said. “I would actually highly recommend it to anyone in a similar circumstance."