How to Buy a Home for Your Child

Parents’ guide to buying a home for your child.

buy a home for your child

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Helping your child to buy a new home can often be a difficult yet exciting time. With many different options available to help your child buy their first home, we have compiled 6 top tips for parents to help buy your child their first home.

  1. Improve Your Child’s Credit Score
  2. Gifting Money for a Down Payment
  3. Add to Your Child’s Reserves
  4. Finance the Mortgage
  5. Co-borrow
  6. Keep Taxes and Other Ramifications in Mind

Improve your child’s credit score

Having a good credit score is essential for buying a house. There are various ways in which you can help improve your child’s credit score. Here are 4:

  1. Open them a savings account
  2. Have them get a job
  3. Have your child authorized on your credit card
  4. Help them apply for a student credit card

Opening your child a savings account earlier rather than later will allow the basic principals of money to be learned. As well as the saving, you will be able to provide additional funds to help support them in the future, avoiding debt and maintaining a positive credit score.

Helping your child get a job will allow a source of income to put towards their savings account. This will also further help your child learn the principal of handling money, hopefully encouraging future success and positive credit scores.

Having your child authorized on your credit card is a simple way to build up a credit history early on. It is to be noted that both your name and their name are tied together, meaning if you fall behind on payments this will affect their credit score. This shouldn’t be a problem if you are within good finances and would be advised against if not.

Once old enough your child will be able to apply for a student credit card if they are heading to University. Student credit cards usually come with reduces interest and lower funds, however, provide a great opportunity to create a credit history and build a good credit score. Ensure your child is fully informed on how best to use this card, how to pay the card and when to pay the card to avoid any unwanted financial troubles.

Gifting money for a down payment

One of the most common methods for helping buy a home for your child is to simply gift money for the down payment of the house. This can be any amount you choose or be more than required if you’re feeling generous. It is important to note that this money must be traceable (no cash) if sending via bank ensure it is sent months in advance and if by cheque ensure it is checked in well in advance to putting in the down payment. These requirements are needed to provide proof that the money received is not a loan. It is common to have to sign additional papers to prove this, so don’t be alarmed if you are asked too.

Add to your child’s reserves

Similarly to gifting money for a down payment, adding money to your child’s reserves will allow for a backup fund to be created if they are unable to make a payment. This will allow their credit score to remain positive allowing for the opportunity of further purchases within the future. Opening a separate savings account is also possible in your name for this purpose, with money sent only if required whilst building interest.

Finance the mortgage

Parents with extra money in the bank may be able to become the mortgage holder for the new home. With the option for increased rates of interest, no closing costs and not requiring a down payment it ultimately works out considerably cheaper. This is, however, if you have enough money aside to finance the mortgage. Additionally, using a mortgage calculator like the free one from will allow you to see the cost of the mortgage for both parties whilst analyzing existing finances to see if this is a viable option.

Whilst lending through a family a minimal rate which be met between both parties, this is to ensure that the house is not being gifted to your child. This varies from country to country so make sure to research beforehand.


An alternative option for financing the mortgage by yourselves is to co-borrow with your child. Co-borrowing is essentially splitting the mortgage between two parties, therefore, reducing the amount your child will have to pay on a regular basis whilst providing financial support through yourselves.

If considering co-borrowing it is important to mention that this may affect parents credit, even if the payments are made on time. Additionally, some lenders may be uncomfortable with this and not allow within the mortgage. Be sure to have the right conversations with the mortgage provider to see what options are best suited to yourselves.

Keep taxes and other ramifications in mind

It is important whilst lending money or providing alternatives to your child’s finances to make sure your finances are in check. Make sure you can pay taxes and beware of any ramifications may result due to your new lending process (granted you set one up). At all times be aware of your own finances and ensure buying a new home for your child (or helping) is possible, preventing difficult financial situations down the line for both yourself and your child.

Ramifications may also be made to the newly bought home. If possible, save extra funds to deal with these as they come, preventing your child’s new dream home from crashing down.

A final thought

With a plethora of options to assist in buying your child’s first home from building a credit score early on to placing a down payment and lending money, there really are many options to suit the needs of both the parents and the child throughout the entire process. One further piece of advice is to work together and discuss your options with a professional before diving into it, this will make the whole process much easier.

Author BIO

Barry White is the owner of RightSwitch, he has a passion for web design and user experience and When not working he enjoys hiking and sea swimming.

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