Adding Children to Mortgage Applications on the Rise, Raising Concerns for Single Parents
WASHINGTON – A growing number of single parents are being advised to add their adult children to mortgage applications to improve their chances of qualifying for a home loan, a practice that’s sparking debate among financial advisors. The trend comes as homeownership remains increasingly out of reach for many, especially those navigating financial challenges as single-income households.
The practice gained traction amid rising home prices and stricter lending standards. According to recent data, first-time home buyers in the last year shrunk to an historic low of just 24% of all buyers, compared to a ancient norm of 40% prior to 2008.This shift is partially attributed to increased housing equity, making it harder for individuals to accumulate a sufficient down payment and meet debt-to-income ratios. Adding a child’s income to the request can bridge that gap, but experts caution it carries critically important risks.
“It’s becoming more common for real estate agents to suggest this as a solution, especially for parents in their 50s who may be facing challenges qualifying on their own,” says Quentin Fottrell, a financial columnist for MarketWatch. “However, it’s crucial to understand the long-term implications before adding someone to your mortgage.”
the median household income of first-time home buyers has grown by $26,000 in the last two years, reaching $97,000 this year, suggesting a need for dual-income applications. But co-signing or adding a child to a mortgage creates joint legal duty for the debt. This means both parties are liable if the other defaults, perhaps impacting the child’s credit score and future borrowing capacity.
Financial advisors reccommend exploring all other options – such as improving credit scores, increasing savings for a larger down payment, or seeking assistance programs - before considering adding a child to the mortgage. They also stress the importance of a thorough discussion with a financial professional and legal counsel to fully understand the potential consequences.
