The Bank of Mom and Dad: Helping Your Child Buy a Home

Would you help your adult child buy a home? For many families, that question has moved from a distant idea to a real conversation at the kitchen table. In today's market, one of the most significant resources first-time buyers are using is not a grant or a particular interest rate. It is help from family — what many people call the Bank of Mom and Dad.

As a Baby Boomer mom and a Realtor, I see family support come up again and again in real transactions. Parents want to help their children begin building a life and, potentially, long-term wealth through homeownership. Every family is different, and there is no one right answer, but it is a conversation worth having thoughtfully.

Why family help has become part of the buying conversation

Buying a first home today can feel very different from buying one decades ago. Buyers may have strong careers and reliable income, but they are also balancing rent, student loans, everyday expenses, higher home prices, and the cost of saving for a down payment. Closing costs, insurance, property taxes, and monthly payments all need to fit into the plan, too.

At the same time, many Baby Boomers have resources their adult children have not had time to build: equity in a longtime home, a paid-off mortgage, savings and investments, or proceeds from a home that has appreciated over many years. For some families, sharing a portion of those resources now can feel more meaningful than waiting for an inheritance later.

Three ways parents may help

The structure matters. These are three common paths I see families explore, each with its own financial, tax, legal, and emotional considerations.

• Gift funds for a down payment: Parents may contribute funds that help cover a down payment or closing costs. Lenders have specific documentation and timing requirements for gift funds.
• Buy the home together: A parent and adult child may purchase jointly, which can change purchasing power and ownership responsibilities.
• Purchase the home and make a family loan: Some parents buy the home with cash and create a properly documented arrangement for their child to repay them monthly, with or without interest.

Gift funds: simple in concept, specific in practice

Helping with a down payment can be a wonderful gift, but it is important not to move money around casually. A mortgage broker can explain how gift funds need to be documented and when they need to be transferred. Depending on the loan program, funds may be wired directly to escrow or transferred under a specific process. The lender needs a clear paper trail.

Before sending anything to your child's account, speak with the mortgage professional handling the loan. Following the right process from the beginning can help prevent avoidable delays during escrow.

When parents become the lender

In some situations, parents choose to purchase a home with cash and create a loan arrangement with their child. Imagine a family buying a $700,000 home. Instead of the child borrowing a large amount from a traditional lender, the parents may create a structured loan with clear monthly payments and agreed terms. Depending on the arrangement, some interest may remain within the family and the parents may hold an income-producing asset.

This is not a shortcut to take lightly. A family loan should be properly structured and documented. The goal is to create clarity and protect both generations, not to leave important assumptions unspoken.

Have the professional and family conversations first

Before becoming the Bank of Mom and Dad, bring in the right professionals. Your attorney, accountant, estate-planning professional, and mortgage broker can help you understand the choices and the implications for your family.

• Gift-tax and estate-planning considerations
• Whose name will be on title
• How a loan will be documented, including interest rate and repayment terms
• What happens if payments are missed
• How marriage, divorce, a parent’s death, or changing retirement needs could affect the arrangement
• Whether the support can be provided without compromising the parents’ financial security

These can be uncomfortable conversations, but they are essential ones. A clear agreement can preserve relationships because everyone understands the expectations before a problem arises.

Keep retirement at the center of the decision

Not every parent can or should provide this kind of help, and children should never expect it. Parents need to protect their own retirement plans and future needs first. The key question is not simply, Can we write the check? It is, Can we help without putting our own financial security at risk?

There is no pressure to use one of these strategies. The right choice depends on your finances, your goals, and your family dynamic. A thoughtful plan can help an adult child take their first step into homeownership while honoring the parents’ long-term wellbeing.

Thinking about helping your child buy in Los Angeles or the Valley?

I have helped many families navigate this conversation while purchasing homes in Los Angeles and the San Fernando Valley. If you are considering a gift, a joint purchase, or a family-financed approach, I would be happy to talk through the real estate side of the process and help you prepare for the questions to bring to your trusted advisors.