Multigenerational Living: A Guide to Buying a Home With Family Members

Close-knit families across the country are taking the unconventional route when it comes to cohabitation. They’re opting to buy homes together and live under one roof.

In 2020, there were 6 million multigenerational households in the US. This could mean any combination of parents, adult children, grandparents, and great-grandparents.

Although the lifestyle is pretty straightforward, there are some hurdles. The home-buying process is one. It’s a bit different from traditional real estate purchases.

However, if you take a methodical approach, you can set your family up for a fulfilling life and also secure attractive mortgage rates in Georgia that align with your financial goals.

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The 411 on Multigenerational Households

In recent years there’s been an increase in multigenerational home buying. One of the primary reasons for this trend is economic hardships like rising home prices and student loan debt. The Pew Research Center reports that one in four adults living in multigenerational homes cite financial issues as their motive.

Sharing the cost of a home with family members helps offset expenses and makes life less stressful. However, economic factors aren’t the only drivers. Other benefits include:

  • Easier caregiving for elderly or disabled family members 
  • Childcare support 
  • A strong family bond
  • Improved mental health 

Houses with multigenerational floor plans offer family members the perfect opportunity to live together while maintaining their independence. Amenities like two master suites, converted basements, and guest houses make life comfortable and convenient.

Georgia has a high percentage of multigenerational households compared to the rest of the country, with plenty of multi-family homes on the market. If you’re a first-time home buyer, you can find attractive mortgage rates in Georgia and secure property that’s perfect for your family.

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Challenges of Multigenerational Living

While many families find living together fulfilling, issues can arise. Privacy concerns, interpersonal conflict, and generational differences often get in the way. This happens due to the stress of caring for older family members or differing lifestyles.

There are also challenges surrounding the buying process. With multiple people involved in the purchase, the mortgage lending journey is a bit trickier. Lenders must evaluate each party’s financial stability.

Purchasing a Multigenerational Home

Buying a home with family members may seem intimidating, but it’s quite common and easily achievable if you work with an experienced real estate agent and mortgage broker. However, you should understand the additional considerations single-family home buyers don’t have to worry about.

The process of purchasing a multigenerational home is based on several key factors: 

  • Liquid assets of all parties
  • Who will have primary home ownership
  • Whose name will be on the deed 
  • Tenant arrangements (how long certain family members intend to live there)

There are several ways to approach the buying process. Which one you choose depends on your family’s current financial situation and long-term goals.

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Buy a Home With Cash

If your family has the liquid assets needed to buy a home outright, this can simplify the process. You won’t need a mortgage, meaning you’ll skip some of the steps most home buyers have to address.

Before you consider buying a home with cash, you need to establish a collective budget. Factor in costs like getting the home appraised, an inspection, home renovations, and taxes. You’ll also need a real estate attorney to go over the contract.

Finally, it’s up to you to decide how your family sets up home ownership. One person can legally own the home or you can opt for joint ownership. When thinking about this, you may want to consider long-term plans like inheritance.

Purchase as Co–Borrowers

In this situation, two or more family members apply for a mortgage and share the responsibility of paying off the loan. A lender evaluates each person’s credit, income, and debt-to-income (DTI) ratio to determine eligibility.

Typically, lenders combine the income and debt of each family member. This gives them a single profile to go off of. Once the mortgage is in place, each person shares the repayment responsibility equally.

The family members who applied for the mortgage have shared ownership of the property. The deed and title may list each person involved and specify their percentage of ownership.

Opt for a Co–Signer

If your family’s financial profile is weak, you may consider getting a co-signer to help you out. This involves a separate individual co-signing the mortgage and you and your family making the monthly payments.

Your co-signer should have a strong credit history and healthy income. This improves the chance of loan approval.

Keep in mind that your co-signer is legally responsible for missed mortgage payments. You’ll need to have a good relationship with them and establish a solid understanding that you and your family are financially stable.

Gift Funds

This approach is effective if your family wants to qualify for a large home loan without the obligation of a mortgage. Receiving a gift fund from a relative or friend provides you with a lump sum for a down payment.

Lenders have different requirements and limits for gift funds, so you’ll want to explore your options. It’s also important to work with a real estate attorney to ensure you comply with laws and file the appropriate paperwork.

Gift of Equity

Similar to a gift fund, a gift of equity involves a relative financially supporting your home purchase. However, with a gift of equity, the relative sells their home below market value. The difference acts as a down payment. 

Before pursuing this strategy with a family member, agree on terms like the amount given and any conditions attached to the deal. This ensures you avoid confusion and disagreements down the road. 

Typically, the donor of the gift of equity must provide a gift letter confirming the details and stating that no repayment is necessary. Lenders have their own requirements for a gift of equity, so work closing with a professional who has experience with the process and can secure low mortgage rates in Georgia.  

Loans That Make Sense for Your Situation  

If you and your family are ready to embrace multigenerational living, there are several loan options available. Each one varies based on your family situation. 

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FHA Loans

Backed by the Federal Housing Administration, these are the most common and accessible loans out there. This is a smart option for first-time home buyers who don’t have the financial stability for a major down payment. 

Another benefit of FHA loans is they have relatively low credit score requirements. They also have flexible debt-to-income ratio requirements and allow for gift funds for the down payment and closing costs. 

VA Loans

If you or a family member is a veteran or active-duty service member, VA loans are a great way to get good mortgage rates in Georgia and flexible terms. These loans are guaranteed by the Department of Veterans Affairs, which reduces the risk to lenders and allows them to offer more attractive terms. VA loans typically don’t require you to make a down payment or buy private mortgage insurance. 

USDA Loans

These loans are provided by the US Department of Agriculture to help individuals and families purchase homes in eligible rural and suburban areas. Designed for low-income buyers, USDA loans offer competitively low interest rates and you don’t need a down payment to get approved.

Find the Best Mortgage Rates in Georgia 

The Moreira Team understands the challenges families face when looking for a multigenerational home. 

We recently helped a client buy property that met the financial and lifestyle needs of their family. By adding a family member with a strong credit score and income to the loan, we were able to get them an attractive rate. Learn more

If your family is looking for a home that suits your communal living situation, we’re here to help. Our team has the experience, market knowledge, and resources to find the best mortgage rates in Georgia. 

Get a quote today.