For many parents, the desire to help an adult child buy a home comes from recognizing that today’s housing market bears little resemblance to the one they experienced themselves. Higher prices, larger down payments, and steeper barriers have made first-time homeownership more challenging than ever. You want to help, but you're also wondering... "Is this a good idea?"
Start here: Why are you considering this?
This is the most important part of the conversation.
Are you:
Trying to reduce a taxable estate? (For context: the federal estate tax exemption is currently about $15 million per person, portable between spouses, while Washington state’s exemption is $3 million per person and not portable.)
Helping because your child can’t come up with a down payment?
Concerned they won’t qualify due to income or credit?
Simply wanting to be generous?
Different motivations point to very different solutions. There’s no one “right” answer — but there are options that fit better than others.
Option 1: Gifting a Down Payment (With No Strings Attached)
This is often the cleanest option when it’s financially feasible.
This can be a good fit if:
You can afford the gift without impacting your own financial security
You’re comfortable letting go of the money completely
Your child is financially stable but needs help with the down payment
A few important notes:
You can gift up to $19,000 per person, per recipient, per year without filing a gift tax return (or $38,000 for couples).
Larger gifts are allowed but require filing a gift tax return, and count towards a lifetime exemption.
Lenders require proper documentation, including a gift letter confirming there’s no expectation of repayment.
Option 2: Buying the Home and Renting It to Your Child
Some parents choose to purchase the home themselves and rent it to their child.
This may be a good fit if:
You want to retain ownership of the asset
You’re comfortable being a landlord
The property makes sense as part of your long-term plan
Clear expectations around rent, maintenance, and future plans are essential. My most important suggestion here is to document your agreement, and make it clear if and how you will enforce similar expectations to traditional landlords (annual rent increases, late fees, passing along the cost of repairs, etc). It may feel weird having a contract with a family member, but in my experience, the more important the relationship is, the more important the documentation is to protect the relationship.
Option 3: Loaning Your Child Money for a Down Payment
This is the option I’m most cautious about.
Private loans can create:
High monthly payments for your child
Stress if repayment competes with other expenses
Financial strain for parents if payments stop
This is rarely a good fit unless everyone is prepared for the possibility that the loan becomes a gift. It can also complicate the lending process as it will be factored into the debt-to-income ratio.
Option 4: Co-Buying the Home Together
Co-buying can work, but it requires clear structure.
This can be a good fit if:
Ownership percentages and exit plans are defined upfront
Legal agreements are in place
Everyone understands the long-term implications
Without planning, this option can limit flexibility for both generations. It could still be included in your estate, could be really complex in a divorce situation... in other words, while it could work, it's really not the most ideal situation.
*Note: If you're co-buying with plans that you and your child will be living together in the same home, that's a different conversation altogether.
The Bottom Line
Helping your child buy a home can be a meaningful act of generosity, especially when it’s aligned with your financial security, clear expectations, and open communication.
Before deciding how to help, get clear on why you want to help, and what you’re comfortable with if circumstances change.That clarity is often the most important part of the plan.