How Common Is Parental Help, Really?
Parents helping their kids buy a first home isn't new, but it's not universal either. A 2021 CIBC report found that 30% of first-time homebuyers in Canada got financial help from family, with the average gift around $82,000. In Toronto that number jumped to $130,000, and in Vancouver it hit $180,000. That number's definitely higher now.
You might think parents are borrowing heavily to make those gifts happen, but CIBC estimated only 5.5% of parents actually took on debt to help their kids buy.
Two Ways to Finance the Help
If you're thinking about chipping in, you've got a couple of routes. You can tap a Home Equity Line of Credit — a HELOC, which is a revolving credit line secured against your home — or take out a mortgage.
HELOCs are flexible and usually require only interest payments each month, so the cash-flow hit is lighter. Mortgages generally carry lower interest rates, but you'll pay both interest and principal every month, which takes a bigger bite out of your budget.
If you're planning to pay it back quickly — say, before you downsize — the short-term interest cost might be worth it for everyone involved. Just make sure your help doesn't force your own downsizing or hold your kids back in the long run.
Making Sure You Can Afford It
You'll still need to meet standard approval criteria, which can be tricky if you're retired or living on investment income. If traditional financing doesn't work, a reverse mortgage is an option, but tread carefully — you don't want to jeopardize your own retirement.
Home prices can swing, and there's no guarantee you'll get the return you're banking on if you sell later. A careful look at the numbers is crucial.
If you hold investments in a taxable non-registered account or a Tax-Free Savings Account (TFSA), it might make sense to use those funds before you borrow — especially if your investments aren't earning more than what the debt would cost you in interest.
What Happens If You Buy the Home Yourself
Some parents consider buying a property outright for their kids, especially if the kids can't qualify for a mortgage on their own. That's a red flag for potential financial instability, so think it through.
If you're gifting the money with no strings attached, that's one thing. But make sure your generosity doesn't leave your kids holding a financial burden they can't carry.
Buying the property in your name instead of theirs brings its own complications. If the home goes up in value, you could face capital gains tax. And if your child gets into a relationship, their partner may not love living in a place owned by their in-laws. Even with the best intentions, most people want to own their own home, not wait for an inheritance.
What You Can Do Next
If any of this applies to your situation — or you just want to talk through your options — reach out. We're happy to walk you through what makes sense for your family and your finances.
Matt Broom-Hall Mortgage Broker & Happiness Creator [sayhello@hellomortgage.ca](mailto:sayhello@hellomortgage.ca)
