How to Buy a House With Your Parents' Help

Today, buying your first house is leaps and bounds different than it was for the buyers of generations past.

For starters, real estate costs have risen sharply over the past decade or so. On top of that, economic factors like inflation and interest rate changes have added fuel to the fire, making homeownership harder to attain for many Canadians.

In light of this new reality, many first time buyers have found a new stream of financial support: their parents. As real estate agents in Durham Region and Kawartha Lakes, this is a trend we see firsthand every day.

Having a little help from the bank of Mom and Dad can open up a lot of doors in what type of house you can afford. However, it also comes with a few extra considerations before and after you buy.

In this blog post, we’ll cover some important pointers on how to buy a house with your parents’ help.

How Can Your Parents Help You Buy a House

Once you’ve set some ground rules, you’ll want to discuss the specifics. There are a number of different ways that your parents can support your home purchase. You’ll need to decide together which route works best for everyone.

Let’s explore some of the most common ways parents help their kids buy a house.

1. A One-Time Gift

In terms of upfront costs, your down payment will be the largest financial hurdle involved in buying a house. And the larger down payment you have, the greater your buying power will be when you hit the market.

Taking this into account, one of the most common ways parents offer financial help is through a one-time cash gift. Usually this is a blanket sum of money; however, we’ve also seen parents agree to cover the yet-to-be-determined down payment amount.

Hoping to make a budget-conscious home purchase? Check out these other blog posts for more advice!

2. A Loan

In addition to no-strings-attached gifts, parent-child loans have also become a common type of financial support. What’s helpful about personal loans as opposed to bank loans is that the costs of interest (if any) are usually much lower.

If you decide to borrow money from your parents, it’s still a good idea to have some type of structure in place. Draft up a formal loan agreement that outlines the loan amount, repayment deadlines, and interest. You and your parents can do this independently or with a lawyer depending on comfort levels.

3. Co-signing the Mortgage

Depending on your personal circumstances, you may not qualify for a mortgage on your own. In this case, one (or both) of your parents may offer to co-sign on a mortgage with you. While this can give you a healthy leg up in buying a house, it is a significant commitment for everyone involved.

In a co-signer scenario, each person on the mortgage will be equally responsible for repayment until the contract ends. This means that your lender can go after your parents for payment if you aren’t able to keep up with costs.

4. Joint Ownership

Rather than offer separate financial support, your parents might offer to buy a house with you. While this can be a simple way to boost your budget, it comes with a long list of special considerations.

Co-owning a house involves a number of financial and legal variables. There are also the emotional and interpersonal factors (especially if your parents will also be living in the home).

If you do go this route, you’ll once again want to have some sort of formal agreement in place. Your lawyer can help you write a comprehensive cohabitation agreement that outlines everyone’s rights and responsibilities.

Partner With a Neutral Party

Once you’re ready to start house hunting, get in touch with a local real estate agent. Beyond guiding you through the ins and outs of your purchase, a professional Realtor can be an objective, unbiased third party who ensures everyone’s interests are accounted for during the buying process.

Getting ready to buy a home? Check out these other pages from our site for helpful info and insights!

Buy Your First House With Puckrin & Latreille

Buying a home is one of the most important decisions that you’ll make in your lifetime, and the best place to start is with an experienced real estate agent. That’s where we come in, Puckrin and Latreille.

With more than 175 years of combined team experience, we’ve bought virtually every type of home in Durham Region and Kawartha Lakes. Using this knowledge to your advantage, we’ll help you (and whoever else you’re buying with) find the right home based on your needs and budget. As a neutral third party, we’ll help you navigate every last detail of the process, ensuring everyone feels comfortable, educated, and confident from start to finish.

Ready to buy? We’ll help you find a great home. Call 905-985-7300 or send an email to hello@liveplayinvest.com.

Book a Meeting

Whether buying or selling a home in Port Perry and the surrounding area, our team has you covered. Book a call with us today to get started.

How to Buy a House With Your Parents’ Help