Senior-held home equity can be a resource for the next generation

Older Americans hold more than $14 trillion in home equity — nearly half the size of the U.S. economy. And while seniors can benefit from tapping their equity through a reverse mortgage product, they can also use the loan proceeds to help family members who might be struggling to afford homeownership.

Earlier this week, The New York Times touched on the topic, interviewing several older American homeowners and their children who’d received sizable down payments to become first-time homebuyers.

The National Association of Realtors (NAR) recently reported that homeownership is slipping further out of reach for younger generations. In its 2025 Profile of Home Buyers and Sellers, the real estate trade group said that today’s first-time buyer has a median age of 40 — more than 10 years older compared to the 1980s. What’s more, these buyers accounted for only 21% of home sales in the past year, a share that’s been cut in half since 2007.

But tapping into the housing wealth accumulated by their parents appears to be an increasingly common way for younger Americans to buck this trend.

In its report, the Times cited recent NAR data showing that one in four first-time homebuyers received some form of financial assistance from family or friends as part of their down payment.

California residents Kathy Fitzgerald Sherman and her husband Michael Sherman, who are both in their late 60s, told the outlet that they’d purchased a $500,000 in the Bay Area more than 30 years ago. By the time they sold it, it was valued at more than $2 million.

That surge in equity has helped them to purchase two homes since then, and they recently gifted more than $600,000 to their daughter and son-in-law for a down payment on a condominium in San Jose. That allowed the young couple to remain in the Bay Area, close to their relatives, rather than moving somewhere more affordable.

“By the time they’re ready to move up, they’ll be able to take the down payment that we have given them and reinvest that and handle a larger mortgage payment than they’re handling right now,” Kathy Sherman said. “We’d love to have grandkids.”

Real estate agent Danielle Lazier told the Times that “we have a phenomenon here in San Francisco where the two primary forms of a first-time buyer’s down payment are either tech stock options or the Bank of Mom and Dad, sometimes a bit of both,” Lazier said. She encouraged parents who are considering a similar decision to get started early as the Bay Area housing shortage continues to drive higher prices and competition.

Seniors who are interested in accessing their home equity to help a child with a home purchase should weigh the potential drawbacks — namely, fewer resources in retirement.

Younger generations often need financial support to make ends meet. According to 2024 survey data collected by Bank of America, 46% of Gen Z adults between the ages of 18 of 27 rely on financial support from their family. Similar shares of respondents say they aren’t on track to buy a home, save for retirement or start investing in the next five years.

Granting financial support to children or grandchildren could exacerbate the situation for older generations, as there’s often a lack financial readiness among pre-retirees and general insecurity among those who’ve already left the workforce.

Nearly 90% of working-age Americans surveyed this year by Schroders said they’re worried about generating income in retirement, while roughly two in three retirees don’t know how long their savings will last. Meanwhile, the rising costs of insurance, taxes and maintenance could hinder senior homeowners who want to help a child with their down payment.