Why You Might Want to Consider Buying a House for Your Child

Relying on family assistance has become increasingly common in Canada’s housing market. According to a 2024 Canadian Housing Market Report:

  • 77% would delay saving for retirement if it meant they could buy a home sooner.
  • 71% of Canadians worry they’ll never be able to own a home.
  • 67% say home prices in their city are out of reach.
  • 48% of homebuyers used financial help from their parents or relatives.
  • 21.5% want to enter the real estate market as a step toward starting a family.
  • 20% used money from an inheritance.

These numbers reflect a growing sense of urgency and pressure to buy, even when affordability is out of reach for many. With home prices continuing to rise faster than incomes, it can take years, if not decades, for young adults to save for a down payment on their own. For many families, this reality makes financial assistance from parents a necessary step toward homeownership.

Different Ways to Help Your Child Become a Homeowner in Canada

If you’re thinking about helping your child buy a home, you’re not alone – and there’s no one-size-fits-all approach. Here are some common strategies Canadian parents use:

1. Gift a Down Payment

This is one of the most straightforward options. You provide your child with money to use as a down payment – typically as a non-repayable gift. A gift letter may be required by their lender confirming the funds don’t need to be repaid.

Pros:

  • Reduces how much your child needs to borrow.
  • Helps them qualify for a mortgage sooner.

Considerations:

  • You can’t take it back once gifted.
  • May impact your own financial cushion or retirement plans.

2. Co-sign the Mortgage

If your child doesn’t have a high enough income or credit score to qualify for a mortgage on their own, you can co-sign. This makes you legally responsible for the loan.

Pros:

  • Boosts your child’s borrowing power.
  • Keeps the home in your child’s name.

Considerations:

  • You’re on the hook if payments are missed.
  • It affects your credit and debt-to-income ratio.

3. Buy the Property and Rent it to Your Child

You purchase the home, and your child lives in it and pays you rent. This allows you to maintain ownership and potentially treat it as an investment property.

Pros:

  • You maintain control of the asset.
  • Can offer your child below-market rent.

Considerations:

  • Rental income is taxable.
  • You’re responsible for property management, taxes and upkeep.

4. Joint Ownership (Joint Tenancy or Tenants-in-Common)

You and your child both own the home – either equally or in a split arrangement. You can go 50/50 or structure the ownership based on financial contribution.

Pros:

  • Shared responsibility.
  • Allows your child to gain equity alongside you.

Considerations:

  • May complicate taxes and estate planning.
  • Both parties need to agree on selling or refinancing decisions.

5. Loaning Money to Your Child

Instead of gifting the money, you lend it, with or without interest, under a formal agreement.

Pros:

  • Maintains family dynamics (less resentment if expectations are clear).
  • You could earn some interest.

Considerations:

  • You must be prepared for the possibility they may not repay.
  • Could strain relationships if repayment becomes difficult.

Before You Decide: Questions to Ask Yourself

Helping your child enter the housing market can be a wonderful gift, but it shouldn’t come at the expense of your own financial stability. Before committing, ask yourself:

  • Can I afford this without compromising my retirement or other financial goals?
  • What are the tax or legal implications?
  • Do I have a clear agreement with my child about expectations and responsibilities?
  • What happens in the event of a job loss, divorce, or death?
  • Will helping one child set a precedent for others?

It’s also wise to consult a real estate lawyer, financial advisor, and accountant to fully understand your risks and responsibilities.