Want to help your kids buy a home? Here’s what to consider first
When Jill Perry had her first daughter, Chloe, 25 years ago, she never imagined she’d one day buy her a house.
But in 2019, as Chloe neared adulthood and housing prices climbed, Perry and her husband, who own a farm near Lethbridge, Alta., did just that.
Helping your adult children get a leg up in the Canadian housing market is a generous goal, shared by many Canadian parents who can afford to do so. But it’s also a significant commitment that requires careful planning to ensure your own retirement and long-term financial goals remain secure.
For the Perrys, the plan was to purchase a four-bedroom house for Chloe to first share with university friends who would pay rent while she covered utilities and upkeep. Eventually, as she established herself, their daughter would take full ownership. It was a strategy they could afford, and like many parents, they hoped that purchasing a home for their children would help them to concentrate on school and career goals.
“I wanted to give them an opportunity to focus on what they want,” Perry says.
She’s not alone. A growing number of Canadian parents are helping adult children gain a foothold in a costly housing market. Recent research from the Bank of Canada found that in 2025, 11% of all mortgages issued to first-time homebuyers under the age of 50 were co-signed by a parent. That’s up from just 4% in 2004.
While helping your children buy a first home can be deeply rewarding, doing so without assessing your long-term strategy could put your own retirement at risk. Here’s what to think about when considering whether and how to help.
Jill Perry, second from right with her family, says she wanted to give her kids "an opportunity to focus on what they want."
Consider your own retirement first
If buying a home for your adult children is something you want to do, the challenge is to provide assistance without sacrificing your own financial future, says Sidhant Sharma, a Tangerine advisor.
Some parents may tap into their retirement funds, or draw on their existing home equity, to help pay for a down payment, cover ongoing mortgage payments, or gift money to kids. The problem is that many underestimate how long their money needs to last. An investment portfolio might have to support three decades or more of retirement, says Sharma, who recommends planning for retirement expenses to the age of 95.
“If you take a chunk out of your investments today, you may have to bridge that gap later,” he says.
Consider tax consequences, too. Withdrawing funds from a Registered Retirement Savings Plan (RRSP, called an RSP at Tangerine) or selling investments in a non-registered account may trigger taxes or capital gains, respectively.
“If you realize gains while you’re still earning a good income, you could be taxed at a higher rate than if you were retired,” Sharma adds.
Unlike purchasing a traditional rental property, where the goal is to earn income and eventually sell for a profit, buying a home for your child comes with different expectations. The intent is typically to help them build equity and to benefit from price appreciation.
“You’re essentially loaning money from your retirement to fund someone else’s,” says Sharma. “And while that someone else is your child, and I understand the emotional side, from a financial standpoint, it can be a difficult decision.”
In addition, when parents are listed as the co-owners of the property, they may be legally responsible for the full mortgage if their child can’t keep up with payments, so clear agreements and realistic planning are essential.
Perry’s advice is to set expectations as you would for a tenant — for instance, who should pay for utilities, repairs or insurance? — and document what you agree to so that everyone is on the same page.
Treat property as just one piece of a financial plan
While housing prices in Canada have cooled recently, ownership is still an expensive proposition for many young people, which has led some parents to help their kids out. In pricier markets such as Toronto and Vancouver, Statistics Canada found that roughly 20% of homes owned by people born in the 1990s were co-owned with a parent.
It’s a trend that Sharma is seeing among his clients, with many asking him how they can financially support their children’s homeownership goals. “Buying, renovating, down payments — I’m hearing it all,” he says.
As real estate values fluctuate with the market, it’s important for parents to consider the importance of diversifying their wealth and making sure it’s not all tied up in real estate. If co-ownership is part of your retirement strategy, financial advisors recommend viewing a property purchase as one piece of a broader, diversified financial plan.
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Financial planning is essential before you assist in purchasing a home
To determine whether you can assist in the purchase of home for your child while preserving enough retirement income, it’s best to plan ahead and review your financials. An advisor can help you understand your financial picture and stress-test retirement scenarios.
Sharma points to the 4% rule, a commonly cited retirement strategy. It’s a general rule of thumb for estimating how much savings you may need to fund a retirement over 30 or so years. If you anticipate that you will have enough saved up in order to live off 4% a year in retirement, you may be able to use any extra savings to help your child buy a home. If that’s not the case, you may need to save more or spend less.
“This is just a guideline,” Sharma cautions. An advisor can help you determine whether this is an option for you based on your individual portfolio and goals.
Younger parents thinking decades ahead have other options. Contributing more to a tax-free savings account (TFSA), where withdrawals are not taxed and savings grow tax-free, can create flexibility later.
Another strategy may be to purchase a property now, rent it out for several years, and then transfer it to a child when they’re ready. You will have to pay capital gains taxes on the price appreciation of the home.
“You’re getting into the market early,” Sharma notes, “so you don’t have to bridge 20 years of appreciation.”
For Perry and her family, the timing worked out. She says that her farm’s income and revolving line of credit allowed her and her husband to finance the home for Chloe without touching their retirement funds.
But many parents are not in the same financial position. That’s why it’s important to speak to a financial advisor about your own options and to make sure you can still achieve your financial dreams even as you’re helping your kids reach theirs.
Other ways to help purchase a home
There are many ways to help your adult children with home ownership that don’t involve buying a house outright. Here are a few alternatives.
RRSP advantage: Consider gifting cash to your child, who would then invest it in their own RRSP, assuming they have contribution room. After the funds have been in the account for at least 90 days, your child can withdraw up to $60,000 tax-free through the RRSP Home Buyers’ Plan to use toward a down payment of a qualifying home. The withdrawal is tax-free if the money is paid back within 15 years.
FHSA funding: You could also help your child fund a First Home Savings Account (FHSA). This account allows Canadians to save up to $8,000 per year and $40,000 total toward a first home. As with an RRSP, you must gift the money, which the child would then put into the account themselves. Contributions are tax-deductible, and qualifying withdrawals are tax-free.
Buy together: Another option is buying a property together, combining some of your own money with some of theirs. Adding your name to the title could make it easier to qualify for a mortgage. However, you will share responsibility for the debt.
Help from HELOC: If you’ve paid off your own home, or a sizable piece of it, you could use a home equity line of credit (HELOC) to access the equity in your home and then gift those funds to your children for their downpayment. Your lender may require a gift letter to verifying the funds are not a loan and, as part of their anti-money laundering policies, documentation to prove that the funds are legitimate.
Rental support: You might also consider buying a home and renting it to your child at a modest rate, with the goal of your kid eventually taking over ownership. Because it’s a rental property, you can write off the mortgage interest, though you will have to pay capital gains taxes when you ultimately sell.
