For many first-time buyers, affording a home today is a steep challenge. With high mortgage rates, persistent student loan debt, and limited housing inventory, young adults are increasingly turning to family, especially their parents, for financial assistance. As a real estate agent, understanding the nuances of parental assistance can position you as an invaluable guide in this emotionally and financially complex journey.

How Parents Are Assisting Today

Agents are seeing a growing number of transactions involving parental support in one of three primary ways:

• Gifting funds for a down payment
  
• Co-signing a mortgage
  
• Co-purchasing the home
  

Each option carries different legal, tax, and financial implications that buyers and their families need to understand. Your role is to help them navigate these conversations with clarity and confidence.

Gifting Down Payment Funds: Know the Rules

A gift is the simplest way for parents to help, but it must be documented correctly. In 2025, each parent can gift up to $19,000 ($38,000 per couple) without triggering the federal gift tax or requiring the donor to file Form 709, provided gift-splitting rules are followed.

Pro tip for agents: Lenders usually require a gift letter to confirm that the funds are not a loan. Remind your clients early in the mortgage process to gather the necessary documentation to avoid delays.

Co-signing: Proceed With Caution

Parents may also co-sign a loan to help children qualify. While this can strengthen the borrower’s financial profile, it also puts the parent’s credit and financial well-being at risk.

What to tell clients: If the child misses payments, the lender will contact both parties, and the parent’s credit will be affected. All parties must understand the risk and have an agreement in place for who pays what and when.

Co-buying: A Shared Investment

In some cases, parents are becoming co-buyers, contributing to the purchase and sharing ownership of the property. This arrangement can be effective, but it requires meticulous planning.

Best practice: Recommend clients create a formal co-ownership agreement outlining:

• Ownership percentages
  
• Rights to refinance or sell
  
• Financial responsibilities
  
• What happens if one party wants out
  

Your clients may benefit from working with a real estate attorney to protect everyone’s interests and ensure long-term clarity.

Setting Expectations: Why Boundaries Matter

Whether funds are gifted or shared ownership is involved, families need open, upfront conversations about expectations. Written agreements help avoid misunderstandings—and protect relationships. Encourage your clients to approach these conversations early and with the guidance of a professional.

When to Bring in the Experts

Parental assistance often involves complex financial planning. Recommend that clients consult a CPA or estate attorney to fully understand the implications of gifting, tax exposure, and inheritance planning.

As a real estate agent, you’re more than a transaction facilitator; you’re a valued, trusted advisor. When clients involve family in their purchase, your ability to guide them with foresight, professionalism, and care becomes even more valuable. Stay informed, stay proactive, and you’ll help families create innovative, sustainable paths to homeownership.

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