Supporting the Next Generation of Homeowners

Housing prices in many parts of the country have risen dramatically over the past decade. Combined with mortgage rates that currently hover around 6.5% as of June 2026, the economics of homeownership have become increasingly challenging for first-time buyers. As a result, many adult children—and in some cases their spouses and families—have found themselves moving back in with their parents while they work toward financial independence and homeownership.

For parents who are financially able, helping a child purchase a home or upgrade to a larger living situation can provide meaningful benefits. However, before offering assistance, it is important to carefully evaluate the financial, tax, and family implications of doing so.

If you are deciding to help your child purchase a home, ask yourself the following questions:

Below are several ways parents can help, each with their own advantages and considerations:

Gifting the Down Payment:

If you have sufficient liquid assets and do not require repayment, providing funds for a down payment is often the simplest and most common way to assist a child with a home purchase.

Key considerations include:

For many first-time buyers, accumulating a down payment is the biggest obstacle to homeownership. Even if your child has substantial savings, your assistance may allow them to make a larger down payment, strengthen their offer in a competitive market, qualify for more favorable financing terms, or avoid private mortgage insurance (PMI).

Providing a Family Loan:

If you would prefer repayment or have concerns about your child's financial responsibility, an intrafamily loan may be an appropriate alternative.

Unlike a gift, a properly structured loan is not considered a taxable gift. Additionally, you may be able to offer interest rates that are lower than those available through traditional lenders, potentially saving your child a significant amount over the life of the loan.

To ensure the arrangement is recognized as a legitimate loan by the IRS, it should:

You should also note that interest received on the loan is generally taxable income. Depending on the amount, this could affect your overall tax situation. Conversely, your child may be eligible to deduct mortgage interest if the loan meets applicable requirements.

Because intrafamily loans involve legal and tax considerations, consulting both an attorney and a tax professional is often advisable.

This option may work well if you want to provide assistance while maintaining accountability and when your child has the financial capacity to manage the repayment obligation. However, there are emotional and financial risks if they encounter any difficulties repaying the loan.

Purchasing and Renting Out the Home:

Another approach is to purchase the property and rent it to your child. This strategy allows them to secure housing while building financial stability and may provide you with a long-term real estate investment.

As your child becomes more financially secure, you may decide to sell the property to them. Alternatively, if they move out, you can choose to continue renting the property, sell it, or retain it for personal use.

Before pursuing this option, consider the responsibilities that come with being a landlord. You would generally be responsible for:

If your child eventually purchases the home from you, the transaction should generally occur at fair market value. Selling the property for less than its market value could result in a portion of the transaction being treated as a gift for tax purposes.

Clear expectations should be established from the beginning regarding rent payments, maintenance responsibilities, and household obligations. This strategy may be particularly appealing if you are seeking ongoing real estate ownership or investment exposure.

Co-Signing the Mortgage:

You may also choose to co-sign your child's mortgage. When you co-sign, the lender considers both your financial profile and your child's during the approval process. This may help your child qualify for a mortgage, obtain a larger loan, or secure a more favorable interest rate.

Under this arrangement, your child owns the home, but you assume legal responsibility for the debt if they fail to make payments.

Advantages

Risks

Because of these risks, co-signing should be approached with the same level of diligence as if you were taking out the mortgage yourself.

Helping your child purchase a home can be a meaningful way to support their financial future and accelerate their path toward homeownership. Whether through a gift, an intrafamily loan, property ownership, or co-signing a mortgage, each strategy comes with unique financial, tax, legal, and family considerations.

Before making a decision, carefully evaluate your own financial position and long-term goals. What works well for one family may not be appropriate for another. By thoughtfully weighing the benefits and potential risks, and consulting with your financial professional, as well as tax and legal professionals when necessary, you can choose an approach that supports your child while protecting your own financial well-being.

Reach out to an Oppenheimer Financial Professional today for guidance and insights tailored to your individual goals.