The perfect wedding gift in 2023? Cash for a home down payment.

As housing affordability remains a major challenge, especially for first-time buyers, one in five couples with registries on The Knot wedding planning website are creating home funds.

Newlyweds Kevin Hannon and Melissa McNichols in front of their new home in the Wissahickon neighborhood of Philadelphia. They set up a “home fund” on their wedding website, and the money helped the couple pay the up-front costs of buying their home.Read moreJessica Griffin / Staff Photographer

by Michaelle Bond

Published Nov. 9, 2023, 5:00 a.m. ET

Newlyweds Melissa McNichols and Kevin Hannon closed on their first house in Philadelphia’s Wissahickon neighborhood on Monday. They couldn’t have done it without their wedding gifts.

They set up a “home fund” on their wedding website along with their honeymoon fund. Family and friends gave about $5,000 to the home fund alone. On top of that money and other cash gifts, their parents were “extremely generous,” McNichols said. It all helped the couple pay the up-front costs of buying a $320,000 home.

“We’d still probably be really saving a lot if we didn’t have that extra cash fund,” said McNichols, 33.

Roughly one in five couples with registries on The Knot wedding planning website — nationally and in Pennsylvania and New Jersey — are asking guests for help paying for a home. The share of couples who include “home funds” on their registries has jumped 55% since 2018, according to The Knot. (The company declined to say how many couples use the platform.)

Both home prices and mortgage interest rates have risen sharply in recent years, making purchasing a home less affordable, especially for first-time buyers with no proceeds from the sale of a previous home. Down payments and other up-front costs keep renters from purchasing even if they can afford monthly costs.

A Zillow survey of more than 6,500 homebuyers between April and July found that about half of buyers were purchasing their first home. First-time buyers were at least twice as likely to say they put gift funds toward their down payment between 2018 and 2022. This year, 43% of first-time buyers said gifts from family and friends helped them with their down payment.

It takes the typical first-time buyer almost 12 years to save for a down payment, according to Zillow. That’s up from nine years pre-pandemic.

Typically, putting down more money up front makes homebuyers more attractive to lenders, results in lower interest rates, and lowers the total cost homeowners pay over the life of the mortgage.

That’s all why The Knot has seen “explosive growth in how home funds are being utilized and perceived,” said Esther Lee, deputy editor.

Getting physical wedding gifts seemed ‘so overwhelming’

McNichols and Hannon, 34, started looking at homes to buy after they moved into their East Falls apartment in early 2021, when the average interest rate for the popular 30-year fixed-rate home loan was around 3%. But they couldn’t afford “astronomical” home prices, McNichols said, so they stopped looking.

They planned their June 2023 wedding from their apartment, where “we have no storage. We have nowhere to put anything,” she said. “The thought of getting physical presents was so overwhelming.”

So they decided to put only two things on their wedding registry: a home fund and a honeymoon fund.

They got back from their honeymoon in France at the end of September and ramped up their home search. On one rainy Saturday, they looked at four homes and put in an offer on the twin that eventually became theirs.

They had to make some compromises, even though McNichols, who works in finance, said she and Hannon, who works for an architecture and design company, have good jobs.

“That’s what really stings,” she said. “We work hard, but we still can’t afford what we really want.”

But the three-bedroom, 1½-bathroom house with a patio and partially finished basement is great for now, and they feel like they lucked out.

Upgrading from a starter to a forever home

Lauren Mallon’s fiancé, William Craven, owns a two-bedroom, 1½-bathroom home in Glenside, Montgomery County, and “he and I definitely want to upgrade,” Mallon said.

“Looking at housing prices, we were like, ‘This is going to take us a while,’ ” she said. Mallon, 30, works in human resources, and Craven, 34, works for the local school district.

As they planned their wedding, Mallon said they knew they wanted to put a lot of their cash gifts “toward our dream house we can raise our family in.”

They combined belongings when Mallon moved into their starter home, and they don’t need many items, she said. So they focused their wedding registry on their home fund and experiences, such as a honeymoon cruise, a ziplining excursion, and airfare. They still put some physical gifts on their registry, because that’s what older generations expected.

Mallon and Craven are getting married on New Year’s Eve, and then they plan to start looking in Montgomery and Bucks Counties for a home to buy.

Third time’s the charm for ‘our next step’

Sam Lardi and Jon Mulcahy, both 31, just got married last month and created a home fund “because everyone knows we’re trying to purchase a house as our next step after getting married,” Lardi said.

They originally wanted to be in a new home before their wedding. The couple started thinking about buying as early as 2020, but with bidding wars everywhere, “we were not in a position to compete with the people that were competing,” she said.

» READ MORE: Trying to buy a house? Good luck.

Around the time they got engaged in February 2022, the South Philadelphia renters were ready to jump into the for-sale market. They went under contract for a home in June 2022. But the inspection revealed problems that the sellers weren’t going to fix. And with a wedding to pay for, they didn’t want additional expenses. So they backed out.

“It’s a lot to do all these things all together,” Lardi said.

Now that they’re married, they plan to purchase a home by the time their current lease ends on July 31. They’ll start seriously looking after the holidays for either a forever home or a starter home. They’d love to stay in the city.

Both work from home — Lardi in financial software and Mulcahy in finance — so they want dedicated work spaces. They’ll search for a place with at least three bedrooms, at least 1½ bathrooms, and some outdoor space. Someplace to park would be nice.

Lardi noted that home prices are higher than they were when she and Mulcahy tried to buy last year.

But with their guests’ contributions to their home fund, “we’re actually in a better position than I predicted we’d be in,” she said. “Still focused on savings but not needing to be as diligent or frugal as I was expecting.”