Why lenders are loosening rules for “sandwich generation” homebuyers

With more Americans living in multi-generational households, lenders are making it easier for people with both children and aging parents to buy homes

Jun.June 01, 2019 02:00 PM
(Credit: iStock)

(Credit: iStock)

More Americans are opting to live in multi-generational houses. Now, lenders are working to make it easier for such family units to take out a mortgage.

The housing market for decades has been dominated by “nuclear families” made up of parents and their children. That is changing, however.

Today, 20 percent of Americans live in multi-generation homes, where at least two adult generations live under one roof, according to the Wall Street Journal. In 1980, only 12 percent of Americans lived in such households.

Buying a home for a multi-generational family can be tricky, especially if the older generation will be a renter in the new home. A home with a rental unit for aging parents is still seen as an investment property, which typically require higher down payments and higher loan rates. Banks and mortgage lenders are working to change their practices to make homebuying for this contingent a smoother process, the Wall Street Journal reports.

Wells Fargo, for example, has lowered its down payment requirement for duplex buyers to 5 percent from 15 to 20 percent. PNC Bank no longer looks at homes with a rental unit for older generations as investment purchases. Online lender Better.com has a specific duplex loan for such situations.

The changes could be a boon to the housing market, which has slumped nationwide this year. Some of that is due to aging Baby Boomers who can’t find buyers for their homes. The phenomenon has been a win for the senior housing market industry, however. [WSJ] -Joe Ward

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