Blog > How can parents help their adult children buy a home in Markham?
How can parents help their adult children buy a home in Markham?
Parents usually help in one of four ways: a gift toward the down payment, a loan documented with a promissory note, co-signing the mortgage, or co-owning the home. A gift is the simplest for lenders, who usually ask for a signed gift letter confirming the money does not have to be repaid. A loan protects the parent’s money but counts as debt and must be disclosed. Co-signing or going on title helps the child qualify, but exposes the parent to the mortgage and, in many cases, to tax on their share when the home is sold. How title is held, as joint tenants or tenants in common, changes what happens if someone dies or the relationship changes. Speak to a real estate lawyer and an accountant before any money moves.
Four Ways Parents Help
| Option | How it works | Main benefit | Main risk |
|---|---|---|---|
| Gift | Money given toward the down payment, not repaid | Simplest for lenders | Parent gives up the money; family law issues if the child separates |
| Loan | Money lent and documented with a promissory note | Parent can be repaid | Must be disclosed to the lender and can reduce what the child qualifies for |
| Co-signing | Parent is added to the mortgage | Helps the child qualify | Parent is responsible if payments are missed, and it affects the parent’s own borrowing |
| Co-ownership | Parent is on title with the child | Parent shares in any growth | Tax on the parent’s share, and decisions need everyone’s agreement |
Michael John Lau, a REALTOR® with the Kaizen Real Estate Team, one of the most active real estate teams in Markham and York Region, asks families to decide how help will be structured, with their lawyer and lender, before the child starts making offers, because the structure affects the mortgage approval, the offer and the closing.
Gifts and Gift Letters
Lenders generally accept a gifted down payment from immediate family. They usually ask for:
- A signed gift letter confirming the amount and that it does not have to be repaid.
- Proof the money has been deposited in the buyer’s account before closing.
- Bank records showing where the money came from, especially for funds sent from outside Canada.
A gift letter is a promise to the lender. If the family actually expects repayment, it is a loan and must be treated as one. To plan the amount needed, see how much down payment you need in Markham.
Gift or Loan: Protecting Family Money
Many parents worry about what happens to their help if their child’s relationship ends. In Ontario, the matrimonial home is treated differently from other property, and money put into it can lose protection it might otherwise have. Families often consider:
- A documented loan with a promissory note, which shows the money is owed back. The lender must know about it.
- A marriage contract or cohabitation agreement that sets out how the parent’s contribution is treated.
- A clear written record of what was given, when and on what terms.
These are legal questions with real consequences. A family lawyer and a real estate lawyer should advise before any money is transferred.
Planning to help your child buy? Call Michael John Lau, REALTOR®, at (416) 700-0286 to plan the search and connect with the right lender and lawyer.
Joint Tenants vs. Tenants in Common
| Joint tenants | Tenants in common | |
|---|---|---|
| Shares | Equal, undivided | Can be unequal, such as 80% and 20% |
| If an owner dies | Their interest passes to the surviving owner automatically | Their share passes under their will or estate |
| Often used by | Spouses buying together | Parents and children, friends or unequal contributors |
| Watch out for | May not match what a parent intends for other children | Needs a co-ownership agreement for decisions and exits |
A co-ownership agreement should cover who pays what, how decisions are made, what happens if someone wants to sell, and how a buyout is valued.
Tax and Program Effects to Know
- Principal residence exemption: if a parent is on title but does not live in the home, the parent’s share may not qualify, which can mean capital gains tax on that share when the home is sold.
- First-time buyer land transfer tax refund: Ontario refunds up to $4,000 to eligible first-time buyers. If a co-buyer, such as a parent, is not a first-time buyer, the refund is usually reduced in proportion to their share.
- Parent’s own borrowing: co-signing counts in the parent’s debt ratios, which can affect their own refinancing or purchase plans.
Speak to an accountant before choosing between a gift, a loan and co-ownership.
A Family Checklist Before the Search Starts
- Agree on the type of help: gift, loan, co-signing or co-ownership.
- Meet a lender together to confirm what the child qualifies for.
- See a real estate lawyer about title, documents and the land transfer tax refund.
- See a family lawyer about protecting the contribution.
- Talk to an accountant about tax on any parent-owned share.
- Put everything in writing, including expectations among siblings.
For first-time buyers planning their budget, see what a first-time buyer can afford in Markham. Ultimately, the decision is yours. The goal is to make sure you have all the information.
Next Steps
- First-time buyer services: a clear plan for your child’s first purchase.
- Use the mortgage calculator: see how a gift changes the payment.
- Book a family planning call: map out the search before offers begin.
Frequently Asked Questions
Can parents gift a down payment in Ontario?
Yes. Lenders generally accept a gifted down payment from immediate family. They usually require a signed gift letter confirming it does not have to be repaid, and proof the money is in the buyer’s account before closing.
What is the difference between a gift and a loan to my child?
A gift does not have to be repaid. A loan is owed back, should be documented with a promissory note, and must be disclosed to the lender, which can reduce what your child qualifies for.
What is the difference between joint tenants and tenants in common?
Joint tenants own equal shares, and if one dies, their interest passes to the survivor. Tenants in common can own unequal shares, and each share passes under the owner’s will.
Should I co-sign my child’s mortgage?
Co-signing can help your child qualify, but you become responsible for the mortgage and it affects your own borrowing. Speak to a lender and a lawyer first.
Will I pay tax if I am on my child’s title?
Possibly. If you do not live in the home, your share may not qualify for the principal residence exemption, which can mean capital gains tax when it is sold. Speak to an accountant.
Can my child still get the first-time buyer land transfer tax refund if I am on title?
Usually only in part. If a co-buyer is not a first-time buyer, the Ontario refund is generally reduced in proportion to that person’s share. Your lawyer can confirm.
Work With Michael John Lau in Markham
Michael John Lau helps Markham families plan parent-assisted purchases so the help, the mortgage and the search all line up. That includes working alongside your lender and lawyer, setting a realistic budget and finding homes that suit the child’s next chapter. The goal is to help the next generation buy with confidence while protecting the family.
📞 Contact Michael John Lau, REALTOR®
🌐 www.callmikelau.com
Helping your child buy their first home?
Michael John Lau helps families plan the purchase with the right professionals before offers begin.
Michael John Lau, REALTOR® · Markham, Ontario · (416) 700-0286
Disclaimer. Michael John Lau is a licensed REALTOR® serving buyers and sellers in Markham, Ontario and the Greater Toronto Area. This article summarizes common lender practices, Ontario property ownership options and general tax rules as of October 2026. Michael John Lau is not a lawyer, accountant or mortgage professional, and this article is not legal, tax or financial advice. Speak to a real estate lawyer, a family lawyer, an accountant and a lender before transferring money or choosing how to hold title.