How to Help Your Kids Buy a Home... And Get Paid Back!

As a parent, you watch your adult children navigating a housing market that looks very different from the one you bought into. Rents are rising, and the hurdle of a down payment can feel insurmountable. You might be asking yourself: Is now the right time to step in?

The answer—based on current market conditions and tax incentives—might be yes. But helping your child doesn't have to mean writing a blank check. It can be a structured partnership where you both win.

Here is the math behind why getting your kids into the market now is a smart financial move for the whole family.

Why The Conditions Are Right

Before we look at the specific numbers, let's look at the landscape. We are currently seeing a "Goldilocks" window for first-time buyers:

1. Reasonable Real Estate Prices: Prices in the condo/starter home segment are accessible relative to income and compared to rent in many markets

   
   

2. Stabilizing Interest Rates: We are seeing a return to manageable borrowing costs

   
   

3. Incentives: The FHSA (First Home Savings Account) and RRSP Home Buyers' Plan are powerful tools that didn't exist a generation ago. Each province also has incentives for FTB’s.

The Case Study: Renting vs. Owning a $300k Condo

Let’s look at a realistic Calgary scenario.

• The Rental: An average 2-bedroom rental costs ~$2,000/month (assume increases 3% annually)

  
  

• The Purchase: An average 2-bedroom condo costs ~$300,000 (assume increases in value 3% annually)

  Assume municipal taxes & HOA fees also rise 3% annually

  
  

If your child rents for 5 years, they pay their landlord’s mortgage. If they buy, they pay down their own principal. But how do we bridge the gap to get them the keys?

Two Models for "Parent Partnership"

We have modeled three scenarios based on a 4% interest rate over a 5-year term. In all scenarios, the goal is to get the child into the market to start building equity.

Model 1: The "20% Down" Power Move

• The Split: The child contributes 5%, and the parent contributes 15%

  
  

• The Benefit: Putting 20% down eliminates the need for mortgage default insurance, lowering monthly payments and saving thousands in fees

  
  

• Living Costs: Buying is comparable to renting

  
  

• Parent Payback: Pay back the parents ‘gift’ equity at 5 yr. mortgage renewal time

  
  

• The Result: After 5 years, the estimated equity in the home is ~ $94,000.

Model 1A: The "10% Down" Split

• The Split: The child contributes 5%, and the parent contributes 5%

  
  

• Mortgage Insurance: There will be a Fee as this is now High Ratio Mortgage

  
  

• Living Costs: Slightly higher than above 20% down model

  
  

• Parent Payback: Pay back parents ‘gift’ at 5 yr. mortgage renewal time

  
  

• The Result: After 5 years, the estimated equity in the home is also ~ $94,000.

  
  

Model 2: The Co-Sign Support

• The Split: The child contributes 5%, and the parent contributes 0% but co-signs mortgage allowing child with minimal credit history to benefit from the parents

  
  

• The Benefit: If the child can afford the increased monthly cost, with the minimum down payment, getting into the market is statistically better than

• renting after you factor in Equity Gained.

  
  

The Cost of Waiting (Why You Should Act Now)

Some parents advise their kids to "wait a year and save more." Here is why that math rarely works out.

If your child waits one year to buy that $300,000 condo:

1. Lost Principal Payment: They miss out on ~$5,732 in principal paydown (wealth that went to a landlord instead of their pocket)

   
   

2. Price Appreciation: If the condo appreciates by just 3%, that property will cost $9,000 more next year

   
   

3. The Net Loss: Waiting a year could cost the family nearly $15,000 in lost opportunity and increased costs.

What is a “Gift Letter” and how does it apply

Under normal circumstances, a ‘loan’ for a down payment is considered a liability and would hurt as much as it helps the mortgage application. However, funds from immediate family (parents, grandparents) are considered a ‘gift’, and the gifter would acknowledge that in a letter as part of the application. If or how that gift is returned is not a concern as it is within the family.

Let's Run Your Numbers

All markets are different, and every family's financial situation is unique.

If you are considering helping your adult children buy a home, let’s sit down to discuss. I can generate a custom Rent vs. Buy Analysis for your specific budget to show you exactly how a partnership could work.