Buying a Home for a Family Member in Canada
Helping you support the people who matter most.
More and more families are stepping in to help one another enter the housing market, secure stable housing, or age with dignity.
Whether you’re helping your child buy their first home, finding a safe place for your aging parents, or supporting a relative who needs a fresh start, we’re here to make the process understandable (and completely stress-free!).
Why People Choose To Buy Homes For Loved Ones
Families help one another in many ways. Buying a home for a loved one is a major act of support, and it comes with unique opportunities and responsibilities. Here are the most common reasons families choose this path.
Helping Children Enter the Housing Market
Many young adults struggle to qualify on their own because of rising prices or limited credit history. Purchasing a home for your child can provide stability and reduce the cost of renting. It also allows your family to begin building equity sooner.
Ensuring Safety and Comfort for Aging Parents
Adult children often want their parents to live closer or move into a more suitable home. Buying on behalf of a parent can create a safer and more supportive living situation without the pressure of qualifying on their own.
Supporting Relatives With Limited Income or Credit
Some family members need help due to financial limitations or life changes. Buying a home on their behalf can offer security and a sense of independence that would otherwise be difficult to achieve.
Growing Long Term Family Wealth
Real estate can be a powerful wealth building tool. Purchasing a home for a family member can benefit multiple generations, especially when the family plans together and understands the long term impact.
Regardless of why you may be considering buying a home for a loved one, the next step is understanding the rules. In other words, how lenders view these arrangements.
Lender Rules Around Buying a Home For a Family Member
The down payment for your second home depends on the following:
Will the borrower live in the home?
Some lenders classify the property as owner occupied even if the borrower is not the occupant.
When the occupant is an immediate family member, certain programs allow down payments as low as five percent if the home qualifies for mortgage insurance. This often leads to better approval conditions, more flexibility, and lower upfront costs.
Will the property be rented to the family member?
In situations where the occupant is not considered an immediate family member under the lender’s policy,
the home may be classified as a rental property.
This typically requires a minimum down payment of twenty percent and may involve additional documentation about rental income and property use.
Why Does This Matter?
The way a lender classifies the property directly affects down payment requirements, approval criteria, and insurance options. Each lender has its own interpretation of family occupancy. We help you match your situation to the lender that offers the best fit.
If you want guidance on your specific situation, reach out to one of our expert mortgage brokers.
Other Ways To Support Loved Ones With Home Purchases
Supporting a loved one does not always require you to purchase the home yourself. There are several flexible ways to help!
Gifted Down Payments
Family members can gift part or all of the down payment. A simple gift letter is required to confirm that the funds are not a loan. Gifted down payments can help first time buyers qualify more easily and reduce their monthly payment.
Joint Ownership
Some families prefer to share the title. This can offer clarity about ownership, equity, and responsibility. It may also help with approval and long term planning. We help families understand the advantages and potential outcomes of joint ownership.
Co-Signing the Mortgage
If your family member needs help qualifying, you can join the application as a co-signer. This strengthens income and credit conditions and can help the applicant meet lender requirements. Co-signing does not require you to take on full responsibility for the home, but you are responsible for ensuring payments are made.
Feeling overwhelmed? When you work with a Legacy Mortgage Group Broker, we’ll go through all of this with you so nothing feels confusing! We’ll make sure you understand everything and feel confident in your decision to purchase a second property.
Buying a Home for a Student or Young Adult
If you are helping your child while they attend college or university, you may be able to take advantage of specific programs designed for this situation.
Many lenders allow a parent to purchase a home for a child attending school and classify it as owner occupied as long as the child lives there full time. This can allow lower down payment options and more flexible approval.
Benefits include:
- A stable and safe place to live during school
- Reduced housing costs compared to renting
- The potential for long term equity growth
- The option to keep or sell the home after graduation
These programs are common in cities with large student populations such as Edmonton, Calgary, Kelowna, Vancouver, and Victoria.
Taxes, Insurance, and Other Financial Considerations
Before moving forward, it is important to be aware of a few financial and legal considerations that may affect your long term plans.
Capital Gains Tax
If the home isn’t your primary residence, you may owe additional tax when you sell it.
First Time Homebuyer Status
If you purchase a home for your child first, it may influence their eligibility for first time homebuyer programs when they eventually purchase their own home.
Estate Planning Factors
Joint ownership, gifted funds, and shared title can have long term implications for your estate. An accountant or lawyer can help you plan for the future. Our role is to help you ask the right questions.
Financing Tools That Can Help Families
If purchasing the home outright is not the best fit, there are flexible alternatives that can still help you support your family.
Using Your Home Equity (HELOC)
A home equity line of credit can be an excellent way to finance a down payment or contribute to the purchase. It offers flexibility because you only pay interest on the amount you use.
Joint Ownership Arrangements
Sharing ownership with your family member can balance responsibility and support. It can also open additional financing options depending on the lender.
Estate Planning Factors
Joint ownership, gifted funds, and shared title can have long term implications for your estate. An accountant or lawyer can help you plan for the future. Our role is to help you ask the right questions.
Every buyer’s situation is unique.
Choosing if and how to assist a loved one with their home purchase is a big decision, but it doesn’t have to feel overwhelming! Once we understand your goals, budget, and timeline, we’ll walk you through the options and help you pick the approach that feels the most comfortable and sustainable for your life.
Why Work With Legacy Mortgage Group?
Supporting your family with homeownership can feel meaningful and rewarding. It also comes with important decisions. We help you make those decisions with confidence.
Personalized Guidance For Your Family’s Situation
We specialize in helping families structure their purchase in the most cost effective and sustainable way. Our team helps you:
- Understand lender classifications and requirements
- Choose ownership structures that fit your long term goals
- Navigate down payment rules and gifted fund options
- Compare financing methods and approval strategies
- Ask the right financial and legal questions
We focus on clarity, comfort, and long term planning so you and your family feel supported from start to finish.
If you’re ready to take the next step, reach out to one of our expert mortgage brokers today.
Ready To Explore Your Options?
Let us help you find the simplest and most supportive path to buying a home for a loved one.