“We’d like to help our kids buy a house. What’s the smartest way to do it?” According to Redfin and Axios, nearly 26% of recent homebuyers relied on family cash to make their down payment. Multi-generational questions are rapidly normalizing.
On the surface, it seems straightforward. For most people, the train of thought begins simply. Write a check for the down payment, or maybe even buy the property outright. Having walked clients through this many times, life has a way of making financial decisions more complicated. The real decisions are less about dollars and more about structure, relationships, and long-term intent.
Here are the key issues we walk families through before any money changes hands.
Honest Relationships
Before you move a dollar, pause and ask: what’s the status of the relationship? Are they dating? Engaged? Married? Do you know and trust the partner or are you uneasy about the future spouse?
These aren’t just social questions. You might be surprised (or not) at how often we have to help clients navigate financial fallout when their kids’ marriages don’t work out. It’s always worth understanding how to structure your involvement if the thought of losing half of it makes you very uncomfortable.
Loan vs. Gift
One way to protect yourself is to make the down payment a formal loan rather than a gift. Have an attorney draft loan documents. Set terms for principal and interest. God forbid the relationship doesn’t last, the money remains a recoverable loan instead of a lost gift.
Many parents push back here: “If my child could afford a loan, they’d go to the bank.” Fair point, but the loan isn’t about burdening your child as much as it is about protecting you. You always have the option to forgive payments down the road, even to treat it as part of a wedding gift. A loan just gives you leverage and clarity if things unravel.
One important note: the IRS doesn’t recognize “interest-free” loans. If you lend without charging interest, the IRS can require you to report “imputed interest” as taxable income on your own return.
Who Owns It?
Beyond the down payment, consider the title itself. Whose name goes on the deed? Just your child’s? Both partners? Yours and leased back to them?
If the money is coming from your side of the family, you may want ownership to remain with your child alone, at least until marriage. Later, you can revisit whether to retitle or forgive part of the loan as a wedding gift.
As a rule, do not put your name and one or both of theirs on the deed. Any time you cross those wires, you open yourself up to potential liability and complicating your gift tax return in the future.
Next Steps
Helping your kids buy a house can be one of the most meaningful ways to support them, but without careful planning, good intentions can backfire both financially and relationally.
The safest path is to treat it like any other significant investment: document it, involve professionals, and make sure it fits with your family’s broader financial plan. That way, your generosity remains the gift you intended, not the headache you regret.
