Residential
Parents Are Saving for Their Kids' Down Payments Before Age Five
By Real Estate Wire Staff, . Real Estate Wire.
Down payment saving has moved into the nursery. Realtor.com News reported Wednesday on the 2026 American Dream Report from Coldwell Banker Real Estate, which found that 82% of parents with children aged five and younger are either actively saving or have considered saving for their child's future home purchase.
Who is driving it
Younger parents are furthest along. The survey found 85% of Gen Z parents and 82% of millennial parents are considering or have started setting money aside, compared with 70% of Gen X parents and 51% of baby boomers. Across all generations, more than half of parents surveyed said they had thought about saving for a child's first home, a share that edged out college funds at 51% and a first car at 49%.
The survey was conducted online by Harris Poll in September, covering more than 2,000 US adults.
Despite the high level of interest, actual saving remains limited. Only about 1 in 7 parents of preschool-aged children, roughly 14%, has already begun putting money away.
Why now
Mary Lee Blaylock, president of Coldwell Banker Affiliates, told Realtor.com that the numbers reflect how broadly affordability pressures have spread. "It's not just about increased mortgage rates and the higher cost of getting a mortgage, but it's also just increased cost of living," she said. "Affordability in general, as we all know, hits our pocketbooks in every aspect, from groceries to homeownership to gas to everything else in between."
David Fisher, founder and CEO of Summit Income Planning Group, put the math plainly: "A down payment might have taken the parents five years to save for, whereas it might take kids 15 years now. Starting at birth gives compound interest time to work its magic before the children can start setting money aside intentionally for this, which typically isn't until their 20s."
How families are saving, and the tradeoffs
Financial planners cited in the report point to three main vehicles: standard savings accounts, custodial accounts, and brokerage accounts held in the parents' names. The right choice depends largely on timing and control.
Cade Bekanich, founder of Park Lane Financial Group, told Realtor.com that a family expecting to hand over funds within a few years will likely lean toward a high-yield savings account, while those with a longer horizon might consider a custodial account for its potential returns.
The control question matters. Custodial accounts set up under the Uniform Gifts to Minors Act or the Uniform Transfers to Minors Act become the child's sole legal property at the age of majority, typically between 18 and 21 depending on the state. "This means whether the money was intended for a home down payment or not, the child has full discretion over those funds," Bekanich warned.
Fisher favors brokerage accounts held in the parents' names for that reason. "The parents can keep control, and the money can go to a house, college, or an emergency, and long-term gains are taxed at lower capital gains rates," he said. "Save for the house in a way that still works if they never buy one."
Each parent can also gift up to $19,000 per child per year without filing a federal gift tax return.
What a down payment gift does not solve
Blaylock was direct about the limits of family assistance. "They still have to not be cash-poor," she said. "Whether there's a down payment, there is still, generally speaking, a mortgage associated with that." She described parental contributions as "a supplement, not a replacement" for a young buyer's own savings.
The survey found that more than half of all respondents have funded or considered funding a relative's down payment, and 15% of current homeowners said they received family or friend assistance to close their purchase. Among those who received help, roughly 7 in 10 are expected to pay it back.
The practical question for agents and lenders is whether this trend produces meaningfully more qualified buyers, or simply shifts the source of funds while leaving the monthly payment problem unsolved. A 20-something with a gifted down payment still needs income sufficient to carry the mortgage, and that gap is the one no savings account opened at birth can close.
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