Baby’s First Home: Parents Are Now Saving for Their Kids’ Down Payment Before Kindergarten

While college funds have long been the standard for forward-thinking families, surging housing costs have prompted parents to begin putting money aside for their child's first home before they even enter kindergarten.

The 2026 American Dream Report, released on Wednesday by Coldwell Banker Real Estate, found that 82% of parents with children aged 5 and younger are actively saving or have considered saving for their little one's future down payment.


"It's just another way that families are coming together and oftentimes pooling their funds together so that eventually those younger kids are able to enjoy financial security that comes with homeownership," Mary Lee Blaylock, president of Coldwell Banker Affiliates, tells Realtor.com®.

Although interest in planning for the future is high, execution is still in its early stages: Only about 1 in 7 parents (14%) of preschool-aged kids has already started saving money for a child's home decades ahead of time.

Younger parents are at the forefront of this nascent trend, with 85% of Gen Z and 82% of millennials considering or actually starting to save down payment funds, compared with 70% of Gen X and 51% of baby boomers.

Across all generations of parents, more than half (56%) have mulled saving for their child's first home, eclipsing both college funds (51%) and a first car (49%).

More than 4 in 5 parents with children under the age of 5 are actively saving or considering saving for their kids' future down payment. (Getty Images)

The American dream endures

According to Blaylock, these findings—drawn from a Harris Poll survey of more than 2,000 U.S. adults conducted online in September—reflect the enduring importance of homeownership amid persistent economic headwinds.

"It's not just about increased mortgage rates and the higher cost of getting a mortgage, but it's also just increased cost of living," says the Coldwell Banker Affiliates president. "Affordability in general, as we all know, hits our pocketbooks in every aspect, from groceries to homeownership to gas to everything else in between. So it's very economic-related."

Additional survey results underscore the foundational role of homeownership: 85% of respondents say that owning property is central to the American dream, with an equal share agreeing that it offers a sense of security that renting simply cannot match.

"Our agents are increasingly seeing more families sitting down together with parents, with the kids, to talk about that dream becoming a reality, whether it's in the near future or in the far future," says Blaylock.

Financial planners are seing this emerging trend play out in real time as parents attempt to give their children a leg up virtually from birth.

"Parents are watching home prices inflate way beyond what their paychecks have changed by and are starting to do the the math early," David Fisher, founder and CEO of Summit Income Planning Group, tells Realtor.com. "A down payment might have taken the parents five years to save for, whereas it might take kids 15 years now. Starting at birth gives compound interest time to work its magic before the children can start setting money aside intentionally for this, which typically isn't until their 20s."

Choosing the right savings vehicle

Despite early financial backing, Blaylock stresses that having access to down payment assistance does not guarantee smooth sailing for aspiring young homeowners.

"They still have to not be cash-poor," she says. "Whether there's a down payment, there is still, generally speaking, a mortgage associated with that. So people still have to be able to afford that piece of it."

Blaylock also points out that financial help from the bank of Mom and Dad does not replace personal savings as the primary source for a down payment.

"I would like to call it a supplement, not a replacement," she adds.

Earlier this year, the median down payment reached $27,000. (Realtor.com)

When choosing the right vehicle for a child's future real estate purchase, there are several options to consider, but financial planners agree that each comes with potential downsides. Broadly speaking, most clients focus on standard savings accounts, custodial accounts, or brokerage accounts opened in parents' names.

"Timing is everything, and it’s likely that someone who is planning to give their children a down payment for their first home in the next two or three years will end [up using] a high-yield savings account," Cade Bekanich, founder of Park Lane Financial Group, tells Realtor.com. "Someone else who plans to gift that money in five, 10, or even 15 years or more will likely say investing ... in a custodial account might earn a great return."

Beyond the timing, the other deciding factor is control. Custodial accounts (such as those established by the Uniform Gifts to Minors Act and the Uniform Transfers to Minors Act) legally become the child's sole property at the age of majority—typically between the ages of 18 and 21, depending on the state.

"This means whether the money was intended for a home down payment or not, the child has full discretion over those funds and now does what he or she pleases," warns Bekanich.

Families also need to consider tax rules. Under 2026 "kiddie tax" thresholds, the first $1,350 of a child's investment income is tax-free, the next $1,350 is taxed at the child's rate (typically 10%), and any amount above $2,700 is taxed at the parents' income tax rate.

Additionally, each parent can gift up to $19,000 per child per year without having to file a federal gift tax return.

Because of custodial limits, Fisher says that brokerage accounts held in the parents' names offer the greatest flexibility while allowing them to control the purse strings.

"The parents can keep control, and the money can go to a house, college, or an emergency, and long-term gains are taxed at lower capital gains rates," he explains. "Save for the house in a way that still works if they never buy one."

Both financial planners agree that each type of account has its advantages and downsides that require research.

"The important piece is to understand why you’re investing the money in the first place to determine what option makes sense for you," concludes Bekanich.

Gen Z prioritizes homeownership

Overall, homeownership is still viewed as one of the most reliable ways for families to build wealth over time.

Younger Americans are especially keen on the idea of owning property. Among Gen Zers who are living at home or renting, 92% want to buy someday, with many willing to forgo other major life goals to achieve that, according to the results of the Coldwell Banker survey.

In fact, 28% of Gen Z respondents would choose their dream home over landing their dream job, and 25% would choose it over finding their ideal romantic partner.

That is because 73% of people in their 20s view homeownership as a mark of financial security.

Gen Z are especially interested in homeownership and view it as a mark of financial security. (Getty Images)

"Gen Zers that are very disciplined in their planning efforts, and they're very focused on homeownership," says Blaylock. "
I think our Gen Zers are growing up."

It is not just parents setting up nest eggs for their children. Financing a home has become a communal experience across broader family networks. 

According to the poll, more than half of survey responders have funded or considered funding a relative's down payment. Among current homeowners, 15% said they received financial assistance from family or friends to secure their real estate purchase.

Yet for most, the aid is a loan, not a handout: Roughly 7 out of 10 buyers who received down payment assistance from family are expected to pay it back.