Affordability is a major challenge for many homebuyers today. With home prices rising, mortgage rates fluctuating, and increasing financial barriers, many first-time buyers struggle to purchase a home on their own.
If you’re a parent (or loved one) looking to help your child or family member buy a home—whether it’s their first home or a move-up purchase—there are several ways you can assist without overcomplicating the process.
Whether you’re in Dallas, Texas, or anywhere in the U.S., including Puerto Rico and the U.S. Virgin Islands, this guide will outline the best financial and practical ways to help your child become a homeowner with the help of Mortgage Mark.
The Best Way to Help? Connect Them With a Mortgage Expert
The homebuying process is complex, especially for first-time buyers. As a parent, one of the best ways to help is to connect them with a trusted mortgage professional.
A mortgage expert can guide them through financing options, eligibility requirements, and down payment assistance programs. While you may want to help them navigate the process, it’s best to let a professional handle the details so they get the best loan for their situation.
The Mortgage Mark Team has helped countless first-time buyers secure home financing and can answer any questions you and your child may have.
Financial Ways to Help Your Child Buy a Home
If you want to assist financially, here are the most common ways to help:
1. Gifting Money for the Down Payment or Closing Costs
- Parents can gift money to help cover the down payment, closing costs, or other upfront expenses.
- Different loan programs have specific guidelines on how gift funds must be documented.
- The gift must be properly documented as a true gift, not a loan (meaning no expected repayment).
It is important to speak with a mortgage lender first to ensure gift funds are handled correctly and don’t create issues during underwriting.
2. Co-Signing the Mortgage (With Caution)
Co-signing may seem like a helpful option, but it comes with serious financial and legal implications.
- As a co-signer, you are equally responsible for the mortgage.
- If your child misses a payment, it impacts your credit and debt-to-income (DTI) ratio.
- If they want to refinance later, you may need to stay on the loan until they qualify independently.
Instead of co-signing, consider helping with monthly payments temporarily while they establish financial stability.
3. Offering an Interest-Free Loan (Privately, Not Through the Lender)
If you want to help your child financially but don’t want to gift the full amount, you can offer them an unofficial loan.
- You can privately lend money, allowing them to repay over time.
This cannot be disclosed in the mortgage process, as lenders require all funds used for the purchase to be gifts, not loans. - Some parents set up a “silent second” where they expect their child to repay them, but legally, it must be considered a gift.
4. Helping With Monthly Payments or Reserves
- Instead of providing a lump sum, parents can help cover mortgage payments for a limited period.
This helps bridge financial gaps while they adjust to homeownership. - Some lenders require borrowers to have reserves (extra savings for mortgage payments), so helping with reserves could strengthen their application.
5. Allowing Them to Live at Home While Saving for a Down Payment
One of the simplest ways to help is by allowing your child to live at home rent-free (or at a reduced rent) while they save up.
- Lowering their living expenses helps them build their down payment faster.
- Encouraging them to pay off debts can improve their credit score and mortgage approval odds.
- This strategy is ideal for young professionals who need time to financially prepare for homeownership.
Should Parents Co-Sign or Gift a Down Payment?
Many parents debate whether to co-sign or gift money. Here’s a quick comparison:
Option | Pros | Cons |
|---|---|---|
Gifting a Down Payment | No long-term financial obligation, helps child qualify independently | Money is gone, must be properly documented as a gift |
Co-Signing the Mortgage | Helps child qualify for a larger loan, keeps cash reserves intact | You are financially responsible, impacts your credit & debt ratio
|
If possible, gifting funds is often a safer and cleaner option than co-signing.
What NOT to Do When Helping a Child Buy a Home
- Don’t overextend your finances. Make sure helping your child won’t put your own retirement or savings at risk.
- Don’t force them into a home they can’t afford. Just because you can help doesn’t mean they should stretch beyond their means.
- Don’t make the process overly complicated. Let the mortgage professionals handle the financing—your role is to support, not control.
- Don’t assume all mortgage programs allow gift funds. Check with a lender to ensure the gift is structured correctly to avoid issues.
Helping Your Child Become a Homeowner
With home prices and interest rates fluctuating, many young homebuyers need financial or logistical support to make homeownership a reality. As a parent or loved one, you can help in many ways—whether financially, emotionally, or simply by connecting them with the right mortgage team.
Key Takeaways:
- The best first step is connecting them with an experienced mortgage lender.
- Gifting a down payment is one of the easiest ways to help.
- Co-signing a loan is an option, but it comes with risks.
- Helping with monthly payments or allowing them to save while living at home can be beneficial.
- Always consult with a mortgage professional before making financial contributions.
If your child is considering buying a home in Dallas, Texas, or anywhere in the U.S., including Puerto Rico and the U.S. Virgin Islands, the Mortgage Mark Team can help guide them through the process.
Contact our experienced team today to explore the best options for your family.
Mark Pfeiffer
Regional Sales Manager
Loan Officer, NMLS # 729612
(972) 829-8639
MortgageMark@MortgageMark.com
Mark Pfeiffer is a Mortgage Loan Originator with CMG Home Loans and a veteran of the mortgage industry since 2003. Mark is responsible for ensuring all loans originated by the Mortgage Mark Team offer competitive terms and close on-time.