Living in your parents’ basement is not all that sexy, and usually reserved for adult children who are not financial capable of living on their own.
However, I know a few couples with well-paying jobs that decided to live together in a parent’s basement or spare bedroom when they were engaged, or even after they were married. This kind of living arrangement might seem to be quite unusual for couples in that stage of their relationship, but it does have some advantages worth considering.
So, what exactly motivates a couple to live together in their parents’ basement?
Assuming the couple is paying no rent to live there, and both parties are working, living in the basement can allow a couple to save a considerable amount of money – enough for a down payment on a house.
This was precisely the motivation for the couples I knew to choose to live in a parent’s basement.
Rather than rely on a gifted donation from family members, these couples chose to save money for a house on their own. The parents showed their support by allowing them to live in one of their spare rooms or their basement.
Conversely, had the couple decided not to live in a parent’s basement or spare room, or if their parents were not supportive of that living arrangement, these couples would not have been able to put down a sizeable down payment – or, even worse, finance 100% of the purchase price (assuming you can still do that these days).
Without a sizeable down payment on a house, their mortgage payments would be significantly higher for the same house. In that event, high mortgage payments could strain their budget, leaving less cash for discretionary and lifestyle spending. Ultimately, the couple would have to look for creative methods of financial relief, such as renting out a room in their new house – an option that was unappealing to them.
The inevitable choice for the couple was either to live with their parent’s in order to save for a down payment on a house, or to buy a house and rent out a room in order to build equity faster and refinance. There’s a certain level of comfort sharing a place with family, and that’s what they chose to do.
The sacrifices of living in the parents’ basement or renting out a spare room in your own home are similar – you’re loosing some of your privacy to save money. This makes financial sense for a young couple just starting out in life. I can’t even imagine the couple doing this long term; but in the short run, it was sustainable and made financial sense.
These living situations may not be for every couple out there, but of all the couples I know who lived together with one of their parents, none of them has regretted doing so. The money they saved has allowed them to be more stable than if they had not done so.
Which would you rather do: Live in the basement of your parents’ house to save up for a down payment? Or buy a house and rent out a spare room with the goal of refinancing?