Due to tight credit restrictions, a considerable number of potential homebuyers are turning to their loved ones for financial assistance.
According to the National Association of Realtors, one-third of first-time homebuyers this year received a cash gift or loan for a down payment from family and friends, the Wall Street Journal reports. In previous years, the average has been about 27 percent.
"Without my sister's help, I don't think I would have been able to buy the house that I did," Scott Nguyen told the paper. Nguyen, a human resources manager from California, was denied a mortgage by several banks until his mother gave him a $15,000 loan to use as a down payment.
Financial advisers say the rise in loan-based gifts are being driven by lenders who are hesitant to approve mortgage applications if borrowers don't have pristine credit.
Consumers may think they have a clean credit profile, but if they haven't reviewed their credit reports in a while, they may be surprised to learn their scores are lower, despite making all their payments on time. This may be due to unfair or inaccurate marks left in error by creditors.