The percentage of first time home buyers who are seeking down payment assistance from their parents is on the rise. The percentage of people who used an FHA loan and got assistance from their parents is up to 26% as compared to the previous rate of 21% in 2011. A FHA loan only requires a down payment of 3.5%. Even with the lower down payment amount, first time home buyers are struggling to stockpile the cash on their own.
- The number of those who turned to a relative to help with making the down payment for a Federal Housing Administration-insured loan increased from 22% to 26%.
- People who take out FHA loans often find it difficult to access loans from other sources because FHA loans do not require strong credit profiles.
- The acceleration of home-price growth has seen a slowing down, but higher mortgage rates and consistently rising prices year after year make buying a home more expensive.
“While conventional mortgages can require buyers to put down as much as 20% of the purchase price upfront, FHA buyers can pay as little as 3.5%. Such loans make up about a 10th of all U.S. home-loan originations, a share that has declined in recent years.”