Parents who hope their children will eventually become first-time home buyers in the GTA often share concerns about current housing affordability and uncertainty about future market conditions.
Housing is expensive. While interest rates are falling, they aren’t what they once were. And for many what’s even more worrisome, is what does the landscape of home ownership look like years from now?
After decades of inaction, the government is starting to enact policy. Recent incentives, such as the GST Rebate, have been introduced to help make home ownership more attainable for first-time homebuyers.
Whether that’s the near or distance future, there are other ways you can help your first-time home buyer children:
- Gifted Down Payments
- Co-signing a Mortgage
- Starter Condos
- Combining Resources, and Investments
Gifted Down Payments
Given rising housing costs and new ways families are thinking about their estates, some parents are choosing to give their children financial support sooner than tradition would suggest, helping them get a foot in the market. Gifted funds are non-repayable contributions from immediate family members that can be used for a home’s down payment and deposit. Most lenders accept them if a signed gift letter confirms the money doesn’t need to be repaid, though some may request proof of the donor’s source of funds.
While a full down payment can be gifted, lenders usually expect the homebuyer to save at least 1.5% of the purchase price for closing costs. Multiple deposits or unclear sources can complicate approval, so one clear transfer is best.
Eligible donors are typically parents, siblings, or occasionally grandparents, but rarely extended family members. The funds must be sourced from the donor’s own resources, not borrowed money. The funds should be deposited well in advance of closing, ideally 90 days prior if the funds are from abroad.
When appropriately managed, gifted down payments can be an effective way to achieve first-time homeownership sooner. It’s always best to speak to an accountant, financial planner and estate lawyer to get the best customized guidance for your particular financial situation.
Co-signing a Mortgage
The main pitfall of living in the GTA is the higher price of entering the housing market. A larger down payment is typically required, and income must be high enough to qualify for a mortgage.
If the down payment isn’t substantial enough and the buyer’s annual income isn’t sufficient, they may not qualify.
For a first-time home buyer, that’s where parents and relatives can step in to help.
However, co-signing a mortgage with a friend or family member carries significant financial risks. Suppose the co-signer is unable to meet their obligations. In that case, the friend or family member may be responsible for covering mortgage payments, taxes, insurance, and fees, which could negatively impact credit and financial stability. Before moving forward with co-signing, it’s critical to carefully weigh the risks and fully understand the responsibilities before agreeing to co-sign a child’s or relative’s mortgage. Also to note that if your child is planning on living with their partner then it adds an extra layer of complexity. Consulting a family lawyer about a cohabitation agreement or just making sure everyone understands the implications of a matrimonial home, is extremely important.
Starter Condos
If the focus is to enter the market quickly, a starter condo could be a viable option. A starter condo is a smaller, typically more affordable unit that is ideal for first-time homebuyers. And with the GTA condo market shifting to a buyer’s market, this move might be the best choice. As of Q2 2025, the average GTA condo price was $685,961. It’s important to keep in mind that most people are not buying their forever home as their first investment in the market. What’s important is to make strategic decisions so you can build wealth over time and have more options with time.
Combining Resources, and Investments
Additionally, if long-term affordability and revenue streams are top of mind, consider another angle to that first home: properties with room for a basement apartment or laneway suite. The option to rent or lease living space to others in the future may be a worthwhile investment now, yielding significant and consistent returns later. Combining the resources of children and parents may be required to make this likely more expensive purchase possible, but eyeing future returns can make this a good option, if feasible.
Other choices for long-term investment include investing in a duplex or participating in real estate savings programs.
Do you still have questions about how you can help your GTA first-time homebuyer? I can evaluate your unique situation!
Are you ready to move to the next stage? Let’s chat. Send me an email (hillary@hillarylane.ca) or text/phone (416-882-4707).
