Helping Your Kids Buy Their First Home

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Helping Your Kids with a Down Payment on Their First Home in Canada

Buying a home in Canada is getting harder, especially for young people. Prices are high, and saving for a down payment takes a long time. Many parents want to help their kids buy their first home. If you’re one of them, here are some smart and safe ways to do it.

1. Give a Financial Gift

You can give your child money to help with the down payment. In Canada, there is no gift tax, so you won’t pay tax on the money you give. But if you give more than $10,000, it’s a good idea to report it when filing taxes, just to be safe.

📝 Tip: Lenders often ask for a gift letter. This letter says the money is a gift and not a loan. It helps your child qualify for a mortgage.

2. Loan Them the Money

If you can’t give the money, you can lend it. But there are rules. You must charge a fair interest rate, or the Canada Revenue Agency (CRA) might think it’s a hidden gift. Also, the interest you earn from the loan is taxable income for you.

⚠️ Warning: A loan might affect your child’s ability to get a mortgage, since lenders count it as debt.

3. Use the First Home Savings Account (FHSA)

Canada now has a special account called the First Home Savings Account (FHSA). Your child can save up to $8,000 per year, to a total of $40,000, tax-free. You can’t put money directly into their FHSA, but you can give them money to deposit into it.

💡 This is a great way to help them grow their savings faster.

4. Let Them Live at Home to Save

If your child lives with you rent-free or pays very little, they can save more money for their down payment. This is a simple way to help without giving cash.

5. Co-Sign the Mortgage

If your child doesn’t earn enough to qualify for a mortgage, you can co-sign. This means you promise to help pay if they can’t. Be careful—this affects your credit and could put your finances at risk.

6. Plan Ahead

Before giving or lending money, talk to a financial advisor. Make sure helping your child won’t hurt your own retirement plans. Also, think about what happens if your child gets married or divorced—will the gift still belong to them?

Final Thoughts

Helping your child buy a home is a big decision. Whether you give money, offer advice, or just support them emotionally, your help can make a big difference. Just be sure to plan carefully and talk openly with your child.

Gerald has worked in public accounting for over 25 years.  He does all manner of tax planning including helping you decide if incorporation is right for you.  He is also a Quickbooks Certified ProAdvisor.  Contact him if you have any questions at askacpa@analytic.cpa or give him a call at 306-937-7001 (Battlefords) or 306-236-5675 (North West Saskatchewan) for practical guidance and solutions to start a new business or kickstart your existing business.  Gerald and his team are here to help you regain control of your financial future—offering clear, professional support every step of the way.