Giving kids a down payment

[Anonymous]

Anonymous wrote:Too bad the discussion can't be tagged with HNW and see what those under $1m say

Can parents who have less than 1m net worth (at 60 or 70) afford to give away down payments?? Maybe 50k. Net worth includes your own home and for most people in dc, that alone would put them over 1m

[Anonymous]

Anonymous wrote:I was planning to give 100k to each kid. I have two. But one lives in a much more expensive state so I may have to give more like 200k. I wish I could give more to both but that's about my limit.

As the sibling who moved to a higher COL area, I did it because salaries in that region made it worthwhile. I would never expect my parents to subsidize that choice to the tune of a 100% greater monetary gift than my siblings got. (None of us got down payment money, but this reasoning shocked me enough to comment anyway. )

[Anonymous]

Anonymous wrote:Start a foundation with that money that will grow. Do it in your kids’ names. That’s a nice legacy. You could really change some kids’ lives if you do it right.

No way on earth I'm giving my kids' money to random other kids. Never happening

[Anonymous]

you should give as much as possible for down payments. My in-laws gave us $65,000 for a down payment in 1995. We bought a house for $325k. We just sold it 30-years laters for $1.75 million.

During that time we did very little in terms of renovations. We reported $150k in improvements to the IRS. So that gift did two things. It allowed us to have a nice home in a great neighborhood. It also built wealth.

[Anonymous]

My neighbor did it. He put up the whole 20 percent downpayment for house for son when he was engaged. He put house in their name and sons name only without his future wife on deed. Was asset pre-marriage she could not touch.

Parents said pump out two kids and be married at least five years you go on title 50/50 with son and we will remove ourselves.

It caused resentment. Well I actually caused it as she came over yelling at me after she moved in about some fence issue. I told her have your husband or inlaws come by to discuss as a rather speak to the actual homeowners and not you. I poked the bear. Man was she screaming at her husband an hour later. Apprantly she did not know all the neighbors knew she was not on title or mortgage

[Anonymous]

We got significant help when buying our house. Ours will be paid off much sooner than it would have otherwise been, and therefore it will be easier for us to gift our children with a down payment (super hypothetical, kids are elementary aged).

Depending on where the kids eventually live/if they have kids, it might make more tax sense to offer to pay for our grandkids’ private school tuition and give a smaller amount for a downpayment. Again, super hypothetical.

Without help from our parents, we would have chosen a much smaller house and/or not been able to afford private school. Dual physician family, so we are now high earners but spent our 20s and early 30s in medical school/training, so we didn’t have a significant nest egg.

[Anonymous]

Anonymous wrote:My neighbor did it. He put up the whole 20 percent downpayment for house for son when he was engaged. He put house in their name and sons name only without his future wife on deed. Was asset pre-marriage she could not touch.

Parents said pump out two kids and be married at least five years you go on title 50/50 with son and we will remove ourselves.

It caused resentment. Well I actually caused it as she came over yelling at me after she moved in about some fence issue. I told her have your husband or inlaws come by to discuss as a rather speak to the actual homeowners and not you. I poked the bear. Man was she screaming at her husband an hour later. Apprantly she did not know all the neighbors knew she was not on title or mortgage

This is not a good story. It's one thing to structure a financial gift to protect your kid, it's another to tell your son and daughter in law's neighbors that she's not on the title until she "pump[s] out two kids". And the fact that you posted it without realizing how badly you come off in this interaction and the retelling is fairly cringe.

[Anonymous]

Anonymous wrote:We got significant help when buying our house. Ours will be paid off much sooner than it would have otherwise been, and therefore it will be easier for us to gift our children with a down payment (super hypothetical, kids are elementary aged).

Depending on where the kids eventually live/if they have kids, it might make more tax sense to offer to pay for our grandkids’ private school tuition and give a smaller amount for a downpayment. Again, super hypothetical.

Without help from our parents, we would have chosen a much smaller house and/or not been able to afford private school. Dual physician family, so we are now high earners but spent our 20s and early 30s in medical school/training, so we didn’t have a significant nest egg.

I actually don't understand the moral of your story. So, you would have owned a smaller house and your kids would attend public school. Not exactly the worst outcome either. Obviously, you likely could easily upgrade both with your dual-physician income, so it's simply a matter of timing.

Would you somehow resent your parents if that had been your trajectory?

[Anonymous]

Anonymous wrote:Too bad the discussion can't be tagged with HNW and see what those under $1m say

If you only have a NW of $1M and your kids are 22+, then you don't give them anything towards a house. You let them live at home until they are ready to buy. But you don't have enough to give them much if anything towards that. You need to save/plan for your own retirement

[Anonymous]

Anonymous wrote:

Anonymous wrote:Too bad the discussion can't be tagged with HNW and see what those under $1m say

If you only have a NW of $1M and your kids are 22+, then you don't give them anything towards a house. You let them live at home until they are ready to buy. But you don't have enough to give them much if anything towards that. You need to save/plan for your own retirement

FYI, it's estimated that only 18% of all US households have a NW of $1MM+.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:We have four kids. We’ve paid for college and grad school for all, nice weddings for the three who got married, and yes provided down payment assistance to the ones who bought houses. In one instance, we even set up a private mortgage for one of the kids—where we were the lender—because they had just got out of college and landed a nice job and a great condo had just gone on the market at a good price right where they were going to work. They had the qualifying income but hadn’t been working long enough to qualify for a bank loan. A year or two later they refinanced and got a bank loan and paid us off.

The point is, you do what you can and adjust to the circumstances. Giving each kid a set $100k amount for a “down payment” is stupid—you wait and see what the actual need is and help then. And when doing it you don’t keep score.

Chances are someone is keeping score. I mean a kid who gets married and buys a house gets $150k or more and another kid who is renting and dating gets nothing? I don’t think it’s stupid to give the same amount to everyone whenever you are handing out these sums.

We have a kid who rents and will forever be single (by firm choice) and doesn’t give a rat’s ass if we help out her siblings who have made different choices. We’ve helped her out plenty and always will and she knows it. She’s quite happy knowing that her little nieces and nephews have nice places to live. I’m sorry to disappoint, but not every family on DCUM is dysfunctional.

Why does it matter the form of how your kid puts a roof over their head? Her nieces and nephews would still have a roof over their heads if that kid rented.

This is what I don’t get…why wouldn’t you give the equivalent down payment to a child who plans to invest it and rent. That could easily be a better use of money than owning a condo.

My kid with children wanted to buy a house in the neighborhood she was renting in and had more than enough income to qualify but not enough down payment. So we helped with that. My single kid who is renting is not looking for a house or a condo right now, but when she does, we will help her too. In the meantime, we are not keeping score. We help when necessary and when asked. I just don’t understand why it’s so complicated. My kids don’t care.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Too bad the discussion can't be tagged with HNW and see what those under $1m say

If you only have a NW of $1M and your kids are 22+, then you don't give them anything towards a house. You let them live at home until they are ready to buy. But you don't have enough to give them much if anything towards that. You need to save/plan for your own retirement

FYI, it's estimated that only 18% of all US households have a NW of $1MM+.

Not surprising. Then 82% of people can't afford to give their kids money to buy a house without risking becoming a burden to their children later. Most of them won't have enough money to retire and will rely on government subsidies or their kids to bridge the gap.

[Anonymous]

My parents gave us a loan for the down payment and charged 6% interest, which went back to the family trust. My siblings and I are the beneficiaries of the trust. DH and I quickly paid off the down payment loan.

[Anonymous]

Anonymous wrote:

Anonymous wrote:We got significant help when buying our house. Ours will be paid off much sooner than it would have otherwise been, and therefore it will be easier for us to gift our children with a down payment (super hypothetical, kids are elementary aged).

Depending on where the kids eventually live/if they have kids, it might make more tax sense to offer to pay for our grandkids’ private school tuition and give a smaller amount for a downpayment. Again, super hypothetical.

Without help from our parents, we would have chosen a much smaller house and/or not been able to afford private school. Dual physician family, so we are now high earners but spent our 20s and early 30s in medical school/training, so we didn’t have a significant nest egg.

I actually don't understand the moral of your story. So, you would have owned a smaller house and your kids would attend public school. Not exactly the worst outcome either. Obviously, you likely could easily upgrade both with your dual-physician income, so it's simply a matter of timing.

Would you somehow resent your parents if that had been your trajectory?

I think the moral is that it made their lives significantly better when things would have been a bit more challenging. Living in a good area, probably closer to their jobs means less stress at a time when they were working long hours and dealing with young kids. Sure they could have been fine without, but anything that reduces stress in the household and ensures a better life is a good thing.
And yes as doctors they would eventually be fine, but if they were going to get that money eventually, why not give it when it matters MOST (ie when the kids are younger and they are working 80 hour weeks and making residency salaries)

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Too bad the discussion can't be tagged with HNW and see what those under $1m say

If you only have a NW of $1M and your kids are 22+, then you don't give them anything towards a house. You let them live at home until they are ready to buy. But you don't have enough to give them much if anything towards that. You need to save/plan for your own retirement

FYI, it's estimated that only 18% of all US households have a NW of $1MM+.

If you include homes, I think it is higher than that. But if not, then nope, those parents should not be gifting $100K to their kids for a home, unless it's a home where the parents will also be living as they age (and be taken care of by those kids).