How To Shop For a Multigenerational Home

A growing number of homebuyers are choosing to buy homes that can accommodate three generations of family members. It’s a way to share expenses and household duties, care for each other, and build wealth. That’s especially true in Latino communities.

A 2021 Pew study conducted with the National Association of Hispanic Real Estate  Professionals (NAHREP) found that Latino homebuyers are historically more likely to live in multigenerational homes and that the trend is strong in fast-appreciating markets like Las Vegas and Phoenix.

"I'm seeing more interest in Latino communities for multigenerational living," said Mark Chavez, a Seattle real estate broker. “In the Mexican communities, we're threatened by our parents to never put them in a home. My husband is Caucasian, so I warned him up front, ‘My mom is going to live with us until she dies.”

It’s part of a broader trend. One in four adults lives in a multigenerational situation, according to a 2021 Generations United survey. In the past 10 years, multigenerational living nearly quadrupled, from 7% of Americans in 2011 to 26% in 2021. Of those surveyed, 45% of Hispanic adults indicated living in a multigenerational household. 

Find out more about what a multigenerational home is, advantages of multigenerational living, and what to look for in a multigenerational home.

What Is a Multigenerational Home?

A multigenerational home typically accommodates multiple generations in one house. This is in contrast to a multi-family home, which typically refers to a condo building or a townhome with separate units for different families. 

Nora Aguirre has also seen a few twists. Aguirre is a realtor working in Las Vegas and a member of the National Association of Hispanic Real Estate Professionals.

She told the Balance about two sisters who bought homes next to each other, with a mother living at one sister’s house. Other families are buying multi-family homes—for instance, a fourplex—with two generations living in two next-door dwellings and renting out the other two. 

Aguirre explained that it’s increasingly popular for multiple generations to live together, especially in the last two to three years. Rising home prices, limited inventory, and high interest rates drive some of the interest. You may need two or three incomes to qualify for a loan or make monthly mortgage payments.

The COVID-19 pandemic revealed family’s critical importance, and sharing a home with family became more acceptable to discuss, Aguirre said. 

“It’s a cool and smart thing to do, to live together, versus everyone having their own house. I think it will continue growing and help everyone build a stronger foundation for saving.”

Out of the roughly 17 closings Aguirre’s office does each month, around four or five involve more than one generation. Most are two generations, comprising parents and children. Some are three generations—grandparents, parents, and grandchildren.

Advantages of Multigenerational Homes

Multigenerational living can help smooth barriers to homeownership, which is important for Latinos, as with many other communities. According to Chavez, homeownership is part of the Mexican-American dream, and you're not really considered successful until you buy a home. 

While the benefit of building generational wealth hasn't always been part of the discussion, it's a critical advantage of buying a home. "Decades of historical data show that those who bought 50 or 60 years ago built wealth that could be passed on."

A key NAHREP goal is “achieving a Hispanic homeownership rate of 50% or greater,” by 2024. In 2022, the Hispanic homeownership rate was at 48.4%, up from 46.1% in 2013.

Homeownership may help close the Latino and non-Hispanic white household wealth gap. In 2019, the median Latino household’s wealth was $36,050, while the median non-Hispanic White household wealth was $189,100. Even though that gap is large, Latino household wealth has more than doubled since 2013.

Sharing Costs and Household Tasks

Purchasing a home together builds equity and intergenerational wealth, while making it possible to share everyday costs like food and utilities. The household can share home duties, as well. A grandparent can offer childcare or cooking skills, helping the household save significantly. 

“Everyone pitches in,” Aguirre said. “If one person gets to stay home and cook, everyone gets to enjoy that, versus going out and spending so much on eating out.”  

While some older Latino parents might want to buy, they may not have the immigration status or credit history to buy a home, Aguirre said. Their children, however, might qualify as first-time homebuyers. The parents still might be able to help out financially, even if they can’t be co-borrowers on the mortgage.

“Usually, it’s the older generation in the Hispanic community that pushes the younger generation,” Aguirre said. “Even if the younger generation isn’t ready yet, the parents are ready—and offer to back up the home purchase with contributed income. If the parents nag the youngsters enough, they’ll do it just to get their parents off their back. Then, they’re super happy about the results.” 

Spending Time With Family

Chavez's mother has lived with him and his husband for several months in their Seattle home. Chavez’s sister and her children, living nearby, often come over to visit. It's a win-win, he said. 

"She feels safe, and we experience life with her until the end. She is in a loving household, and we enjoy spending time with her."

How To Buy a Multigenerational Home

You will first need to consider who will be on the mortgage. As discussed above, sometimes only certain parties have the qualifications to get a mortgage. In that case, other members may want to contribute money without being on the loan.

Other times, you may want multiple people on the mortgage. There is no legal limit to the number of co-borrowers on a mortgage, but your lender may have restrictions. If you’re taking out a mortgage with your family members, everyone will need to meet the lender’s requirements for the loan to be approved.

Everyone on the mortgage must understand they’re equally responsible for the monthly payment, which also goes onto every co-borrower’s credit history. “If someone is no longer interested or able to contribute, the rest of the parties are still responsible for paying the mortgage,” Aguirre said. “Most families understand this and go in on this together.” 

Consider Legal Implications

If possible, you’ll want to meet with a real estate lawyer to iron out details around deeds and ownership, particularly if you hope to split mortgage payments or have a formal agreement around necessary repairs. Doing so can help prevent messy future conflicts when emotions are heated. 

"I've seen a family get into a dispute for $1000," Chavez said. 

He understands that money can be tight when considering home purchase expenses such as down payments, additional funds for rate buy-downs, plus inspections and appraisals. Although agreements are often verbal, he recommends getting them in writing.

Discuss Everyone’s Priorities for a Home

Everyone’s needs may be different, depending on their family situation. Finding the right home can be challenging. 

Aging parents will most likely need a bedroom on the ground floor and a private, full bathroom with a shower. Larger families or families with children may want easy-to-clean options that can handle wear and tear—for example, tile in common areas versus carpet. 

Some families want two main suites, which can be challenging to find at an affordable price point for first-time homebuyers.

According to Aguirre, many of her younger clients want two-story homes, which can work if there are bedrooms on the first floor for the parents or grandparents. And families usually agree they want a larger backyard and kitchen for socializing and gathering, along with a two-car garage or an extensive driveway for shared parking space. 

Understand Down Payment Requirements

Traditional mortgages require down payments of up to 20%, but the payment could be lower if co-owners share the burden. If you’re buying a four-plex, the standard residential down payment and mortgage rules apply. But if you’re buying anything larger than a fourplex, you could have different mortgage and down payment rules. 

Talk to your lender or bank representative about your specific circumstances, and how to meet down payment requirements. Also review down payment assistance programs available in your state to find out if you’re eligible for any and how you can apply. 

Questions To Ask Realtors

According to Aguirre, many agents have a niche, such as only working in a specific part of town or only selling brand-new homes. Some questions you can ask to find an agent who is a good fit for you include:  

• Have you worked with first-time homebuyers? 
• What experiences do you have with helping multigenerational buyers?
• How many families have you worked with to find a home?
• Do you know where to look to find a home with the land and space for a big family?
• What languages do you speak? Do you offer any translation services?

“If an agent gets anxious or uncomfortable with these questions, they’re not the right agent,” Aguirre said. “The agent should have patience, be able to provide resources, and be passionate about first-time homebuyers and multigenerational niches.” 

According to her, the home-buying process can take longer for multigenerational buyers from qualification to closing. 

The bilingual Chavez is also mindful of any language or translation needs. He offers Spanish and English real estate and inspection information for his clients. During inspections, Chavez can help translate for Spanish speakers.

The Future of Multigenerational Homes

There’s no doubt that multigenerational homes have become more common. Even though 40% of adults living in multigenerational households said they chose the living situation because of financial issues, 54% of adults found it rewarding, while just 23% found it stressful. 

Aguirre thinks the benefits of multigenerational homes mean the trend will continue.

“This is a trend for Hispanic home buyers that will stay in the future,” Aguirre said. “It checks so many boxes for Latino homebuyers, regarding saving, building, wealth, preparing for the future, caring for children, and taking care of elders.” 

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