How to help your child buy their first home
Date published - Sep 30, 2025
You want to help your children achieve their dreams - and for many, that includes buying their first home.
With rising housing costs and tougher mortgage requirements, parental support is becoming increasingly important in helping the next generation step onto the property ladder. Here's how you can help make your child's homeownership dreams a reality.
As parents, you want to help your children achieve their dreams – and for many, that includes buying their first home. With rising housing costs and tougher mortgage requirements, parental support is becoming increasingly important in helping the next generation step onto the property ladder. Here’s how you can help make your child’s homeownership dreams a reality.
1. Assess if your child is financially ready
Before offering financial help, have an honest conversation with your child about their overall financial situation:
- Discuss their income, expenses, and existing debts
- Review their credit score (available for free through Equifax or TransUnion)
- Evaluate their savings habits and emergency fund
- Consider if they understand the extra costs of homeownership
According to the Canada Mortgage and Housing Corporation (CMHC), monthly housing costs should not exceed about 32% of gross (pre-tax) monthly income.1 Help your child calculate if they’re within this guideline.
2. Options for helping with the down payment
The down payment is often the biggest hurdle for first-time buyers. Here are ways you can help:
- Provide a financial gift toward the down payment. Lenders typically require a letter confirming the money is a gift, not a loan.
- Offer a family loan with clearly documented terms. Note that lenders will consider this debt when calculating your child’s debt service ratios.
- Consider purchasing the property together, sharing both ownership and financial responsibility.
Tax tip: Remember that in Canada, there’s no gift tax for money given to adult children.
3. Leveraging the Home Buyers’ Plan (HBP) and First Home Savings Account (FHSA)
The RRSP Home Buyers’ Plan (HBP) allows first-time buyers to withdraw up to $60,000 tax-free from their RRSPs to put toward a home purchase.2 As a parent, you can:
- Help your child maximize their RRSP contributions before they plan to buy
- Gift money specifically for their RRSP, which they can later withdraw through the HBP
- Remind them that HBP withdrawals must be repaid to their RRSP over 15 years
In addition to the HBP, your child may also benefit from the new First Home Savings Account (FHSA), which launched in Canada in 2023.3 The FHSA combines some of the best features of both RRSPs and TFSAs. Here’s how the two options compare:
| Feature | HBP (via RRSP) | FHSA |
|---|---|---|
| Contribution limit | None – you’re withdrawing from your RRSP, not contributing to a separate plan | $8,000 per year, up to a lifetime limit of $40,000 |
| Tax deductible contributions | Yes – contributions into your RRSP are tax-deductible | Yes |
| Tax-free withdrawals | Yes | Yes |
| Maximum withdrawal | Up to $60,000 per person | No maximum – you can withdraw as much as you like |
| Repayment required | Yes – over a 15-year repayment period | No |
The key advantage of the FHSA is that withdrawals for a first home do not have to be repaid, unlike the HBP. Your child can also use both programs together to boost their buying power. As a parent, you might consider contributing to their FHSA to help them build a stronger down payment, especially if they’re in the early stages of planning.
4. Co-signing on the mortgage
If your child doesn’t qualify for a mortgage on their own, consider:
- Co-signing: You guarantee the mortgage without being on title, taking on responsibility if your child defaults.
- Co-borrowing: You become a co-owner of the property and are equally responsible for the mortgage.
Important considerations:
- This affects your debt-to-income ratio and could impact your ability to borrow
- It may have implications for your retirement plans
- Consider having a legal agreement in place to outline responsibilities
5. Helping with additional costs
Beyond the down payment, first-time homebuyers face numerous other expenses:
- Home inspection fees (typically $300-$600)
- Appraisal fees ($300-$500)
- Legal fees ($1,000-$2,000)
- Land transfer tax (varies by province)
- Title insurance ($250-$400)
- Moving expenses
- Initial furniture and appliance costs
Offering to cover some of these costs can significantly reduce your child’s financial burden.
6. Exploring government programs together
Help your child navigate available government programs:
- First-Time Home Buyer Incentive: The government contributes 5-10% of the home’s purchase price through a shared equity mortgage.
- First-Time Home Buyers’ Tax Credit: A $10,000 non-refundable tax credit providing up to $1,500 in tax relief.
- GST/HST New Housing Rebate: Available for newly built homes or substantially renovated properties.
7. Supporting the house-hunting process
Beyond financial help, offer practical support:
- Help research neighborhoods and properties
- Attend viewings to provide an objective perspective
- Connect them with trusted professionals (financial advisors, real estate agents, mortgage brokers, inspectors)
- Share your own homebuying and home owning experiences and lessons learned
8. Contributing to home protection
Once your child has purchased their home, you might consider helping with:
- Home insurance premiums for the first year
- Personal life insurance to cover the mortgage
- Setting up an emergency fund for unexpected repairs
- Contributing to necessary home improvements or maintenance
9. Setting healthy boundaries
When helping your child financially, it’s important to:
- Clearly define whether your contribution is a gift or loan
- Document any financial arrangements properly
- Discuss expectations about involvement in decision-making
- Respect your child’s independence and choices
- Consider consulting a financial advisor about the impact on your own finances
Outside of helping your children achieve their home ownership goals, there also might be some tax benefits and opportunities for you.
- Consider using your Tax-Free Savings Account (TFSA) to grow funds tax-free before gifting
- If you’re co-owning as an investment property, explore potential tax deductions
- Consult a financial advisor and/or tax professional to understand the implications and opportunities for your situation
The bottom line
The goal of helping your child buy their first home should be to give them a solid foundation while empowering them to become financially independent. Providing education and guidance alongside financial assistance can help ensure their long-term success as homeowners and as people.
Remember, the right approach depends on your unique family situation, financial circumstances, and relationship dynamics. What works for one family may not work for another.
If you’re looking to help your child achieve their homeownership dreams, contact us today. We can offer personalized guidance on how to support your child’s home purchase while protecting your own financial well-being.
Sources
1. Check if you are financially ready to own a home. March 31, 2018. CMHC. https://www.cmhc-schl.gc.ca/consumers/home-buying/buying-guides/home-buying/check-if-you-are-financially-ready-to-own-a-home?ap=a1-p1.
2. How to participate in the Home Buyers’ Plan. June 25, 2025. Government of Canada. https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/rrsps-related-plans/what-home-buyers-plan/participate-home-buyers-plan.html.
3. FHSA statistics. March 20, 2025. Government of Canada. https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/first-home-savings-account/fhsa-statistics.html.