Parents can help a child buy a first home in six main ways: a gift, a loan, co-signing, owning a share, borrowing against their own home with a line of credit, or a reverse mortgage. For most families, the safest is a gift sized to what the parents can truly spare, because it has the fewest strings. Whatever you pick, test it against your own retirement first, and get your own legal and financial advice, separate from your child's.
You are not the only parent thinking about this. The Bank of Canada found that about 11% of first-time buyer mortgages in 2025 had a parent co-signing. In 2004, it was 4%. And 74% of those adult children would not have qualified on their own.
Why sooner can beat later
Many parents plan to leave their kids money one day. The problem is timing. If that money arrives when your child is 55, it lands after the years it could have changed most.
Help now, and something different happens. Every month your child rents, their rent pays down a landlord's mortgage. Every month they own, part of their payment pays down their own. You also get to see the help land. You watch them move in. You are there for it.
None of that is worth risking your own security. Your child has decades to pay off a home. You may not have decades to rebuild your savings. So start with your numbers, then decide how much help fits.
Option 1: A gift
This is the cleanest option. You give the money, it becomes theirs, and it does not have to come back.
What lenders usually need: if your child puts down less than 20%, the gift normally has to come from immediate family, by blood, marriage or adoption. You sign a gift letter that says it is a gift, not a loan, and never has to be repaid. The lender will want to see the money land in your child's account.
The trade-off: once it is given, it is gone. If your child is married or living with a partner, a gift can end up shared if the relationship ends. A family lawyer can tell your child how to protect it, often with a written agreement.
Best for: parents who can spare the amount without touching retirement savings they will need.
Option 2: A loan
You lend the money and expect it back. That keeps your savings yours on paper.
The trade-off: a loan is debt. When a lender sees a loan payment, your child can borrow less. And because a gift letter says the money never has to be repaid, you should never sign one for money you expect back. If you want to lend, have a lawyer write a proper agreement or register a private mortgage. Tell the lender the truth about it.
Best for: parents who want the money back and a child whose income has room for a second payment.
Option 3: Co-signing
You join the mortgage so the lender counts your income and credit along with your child's. This is how many families get a child over the line.
The trade-off: on a joint loan, each borrower is responsible for the whole amount, not half. If your child loses a job or walks away, the lender can come to you for the full payment. Before you sign, ask the lender what it would take to get your name off later, and how this mortgage will show up the next time you want to borrow yourself.
Best for: parents with stable income who trust their child's habits and could cover the payment for a while if they had to.
Option 4: Owning a share
You go on title as a co-owner, say 25% or 50%. You put money in, and you own part of the home and part of any growth.
The trade-off: you now own part of a home you don't live in. That can have tax effects when it sells, so ask an accountant first. It can also shrink your child's land transfer tax refund. Ontario's first-time buyer refund of up to $4,000 is cut down in proportion to the share owned by anyone who is not a first-time buyer. You will want a co-ownership agreement that says what happens if someone wants out.
Best for: parents who want their money to stay invested and are fine waiting years to get it back.
Option 5: A line of credit on your home (HELOC)
If your home is paid off or close to it, you can borrow against it. At federally regulated lenders, the revolving part of a home equity line of credit can go up to 65% of your home's value. You draw what you need and gift it to your child.
The trade-off: this is your debt, secured by your home. You pay the interest, and the rate can change. If your income drops in retirement, the payment does not. Only do this if the payment fits your retirement budget easily.
Best for: parents with a lot of home equity, steady income, and a clear plan to pay it down.
Option 6: A reverse mortgage
Homeowners usually 55 or older can borrow up to about 55% of their home's value, with no regular payments. Federally regulated lenders that offer them include HomeEquity Bank and Equitable Bank. The loan is paid back when you sell, move out, or after the last borrower dies.
The trade-off: interest is added to the balance every month, so what you owe grows over time. Rates are generally higher than a regular mortgage or a HELOC, and there are fees to set it up. It leaves less equity for you later and less for your estate.
Best for: parents who are house-rich and cash-poor, plan to stay in their home for good, and want to help now instead of later.
The retirement test
Before you choose, sit down and answer these honestly:
- If we give or lend this, do we still have enough for the next 30 years?
- Could we cover our child's mortgage payment for six months if we had to?
- Are we treating all our children fairly, and have we told them?
- What happens to this money if the relationship or the home doesn't work out?
If any answer makes you uneasy, help with a smaller amount. A smaller gift, given well, beats a big one you regret.
Talking about it as a family
The best version of this talk starts with a plan, not a request. Your child shows you their savings, their FHSA, their timeline and the kind of home they want. Then you decide together where help fits.
If your child is thinking about a home with a rental unit, the rent can help them qualify and cover part of the payment. That can mean they need less help from you. Here is how that works in Hamilton: the Hamilton House Hack Starter Kit.
Picture parents in their early sixties, house paid off, retirement a few years away. Their son and his partner are stuck on the down payment. The parents' first instinct is one big cheque. Their advisor slows them down with one question: how much can you give without touching your retirement? They settle on a smaller gift, plus a small share on title with a written agreement on how they get it back if the home ever sells. The kids buy a duplex, the rent helps them qualify, and the parents' plan stays whole. Everyone sleeps at night.
If your child is just starting out, the first-home path is here: the First Home Money Map.
Before anyone signs, the parents should get their own lawyer and financial advisor, separate from the child's, and the child should talk to a mortgage professional about how the lender will treat the help.
Common questions
Can parents give their child the down payment in Ontario?
Yes. A non-repayable gift from a relative is an accepted down payment source. On an insured mortgage, lenders usually want it from immediate family and ask the parent to sign a gift letter saying it never has to be repaid.
Is it better to gift or lend the money?
A gift is simpler for the mortgage, because a loan is debt and lowers what your child can borrow. A loan keeps the money yours. If you expect it back, never sign a gift letter; have a lawyer write a proper loan agreement instead.
What happens if I co-sign my child's mortgage?
On a joint loan, each borrower is responsible for the whole amount, not half. If your child cannot pay, the lender can come to you.
How does a reverse mortgage work for helping a child?
Homeowners usually 55 or older can borrow up to about 55% of their home's value with no regular payments. Interest is added to the balance, so the amount owed grows, and rates are generally higher than a regular mortgage or a HELOC.