Parents are increasingly saving for their child’s future home deposit — but does it make sense?

As housing costs continue to climb, more parents are choosing to save for a child’s future home down payment rather than focusing only on college costs.

The U.S. Sun spoke with several experts about the benefits and drawbacks of that approach, along with the main issues families should think about before setting money aside for a child’s first home.

The average 30-year fixed mortgage rate remains above 7%, putting homeownership out of reach for many Americans as inflation affects nearly everything else.

Although rent has generally risen with inflation, the price of owning a home has increased far more sharply over time, climbing more than 2,350% since the early 1960s.

That trend has left many parents worried about what buying a first home will look like for their children, prompting a growing number of families to build a housing fund while their kids are still very young.

According to the Coldwell Banker 2026 American Dream Report, about 82% of parents with children age five and under are either saving or considering saving for a future down payment.

Coldwell Banker 2026 American Dream Report findings

• Among parents of children 5 and under, 1 in 7 (14%) have already started saving for a child’s future down payment, alongside 1 in 5 (20%) who are already saving for college and 1 in 4 (28%) who are saving for retirement.
• Among all parents, a child’s future down payment (56%) is nearly as common a savings goal as college (51%) and a first car (49%).
• Younger parents are most likely to be considering it: 85% of Gen Z and 82% of Millennial parents have started or considered saving for a child’s down payment, compared with 70% of Gen X and 51% of Baby Boomer parents.
• Half of Americans (51%) have helped or thought about helping with a relative’s down payment.
• Among those who received money from family or friends for a down payment, 71% say they were expected to repay it.

Fourteen percent of parents with preschool-aged children say they have already begun saving for their children’s future homes, years before that money would likely be needed.

One example is Jon Sterling, a real estate agent and father of a four-year-old, who told The U.S. Sun that he has been putting aside money every month for his daughter since she was born.

He said the plan is to help her with a down payment when she is older and, ideally, allow her to buy a house and rent out extra rooms to other college students.

“The exercise is designed to give her a financial leg up and teach her about being a landlord at the same time,” he said.

“For us, this makes more sense than saving for college tuition because it will motivate her to earn scholarships and get a job while she’s in college. If college and work look dramatically different 14 years from now, she’ll still need a place to live, so the lessons will be the same even if she’s skipping college altogether.”

Homeownership remains a core part of the American dream, but financial experts say whether parents should save so far ahead for a child’s first home depends on the family’s situation.

In short, there is no one-size-fits-all answer.

“It’s easy to see why more than 80% of parents are already thinking about a property deposit for a child who’s barely out of diapers. But you’re tying up money for something two decades away, at a time when your own bills and borrowing costs may still be high. For a lot of families, that’s getting the order wrong,” said Lee Trett, mortgage broker and co-founder of Money Helpdesk.

“Building up someone else’s savings before your own are secure doesn’t add up, and most households can’t really afford to do both,” he continued.

“If you’ve got credit card or loan debt, a mortgage that’s exposed to rate rises, or less than six months of essential household costs set aside, a fund for your child’s future home should wait.”

Trett said retirement savings should come first, especially because children can still borrow to buy a home later in life.

“You could end up swapping their struggle to get on the ladder in their twenties for them having to support you in your seventies,” he said.

For families who can afford it, however, even small contributions can grow into meaningful help over time because of compound interest.

Trett said parents do not need to contribute large amounts each month; a modest investment over many years can do much of the work.

With the median first-time homebuyer now age 40, according to the National Association of Realtors, money saved early has decades to grow into a meaningful down payment.

Still, experts say there are several drawbacks to consider before starting a housing fund for a child.

“The downsides are that the money is tied up for a long time, your child may not want to buy, or may live somewhere much cheaper or much pricier, and some parents who give it away early find they need it themselves later,” said Farhan Amdani, a realtor with Century 21 Property Zone Realty Inc. Brokerage in Ontario.

He recommended making savings automatic, flexible, and relatively small if parents decide to do it.

For instance, Amdani said that saving just $100 a month from birth would add up to $21,600 by age 18, not including investment growth.

Even so, he said that money may be better directed toward college costs than housing.

Once a family’s emergency savings, retirement fund, and high-interest debt are under control, Amdani said he would prioritize college before a down payment.

“The bill arrives sooner, and education usually does more for a child’s earning power, which is what lets them carry a mortgage later,” he explained.

Riley Hextell, a broker with eXp Realty, also said long-term college debt can create serious financial consequences for children.

Ultimately, he said, each family needs to judge its own circumstances and choose the path that best fits its goals.

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