As parents, the thing we worry about most is our children. Will they be healthy, financially secure, happy in their jobs and their marriages?

When I sit down with clients, our conversations inevitably revolve around family. And with real estate prices soaring and rents increasing, one common topic of discussion is whether or not to help adult children buy a house.

Let me just say…there’s no easy answer. But if you’re considering helping with a down payment, consider these questions:

Is it a gift or a loan?

Regardless, you first need to calculate how it would impact YOUR financial security. And if you have more than one child, how will you treat them all fairly? If you decide to make it a loan, what if your kids can’t pay it back?

Once they have the down payment, can they really afford home ownership?

Banks typically approve mortgages based on gross income. They don’t factor in the additional costs of ownership like insurance, property taxes and maintenance –– not to mention daycare costs, children’s activities or other lifestyle choices. It’s up to the borrower to determine affordability. 

Do they have the time and inclination to be homeowners?

As well as additional costs, homeownership brings lots of work – yard work, snow removal, repairs and on-going maintenance. Do they have the time and desire to take this on?

Let’s not forget that in today’s economy, young adults are often employed in contract positions with no pensions and no long-term commitments. Higher interest rates in the future also mean what’s affordable now may suffocate kids with mortgage payments for years to come.

Before you consider a gift of money, let’s sit down and have a conversation.

Yes, we want the best for our kids, but sometimes NOT helping them financially is the best help we can give them. Consider helping them build a budget and a long-term strategy that will afford them a chance to accumulate a sound financial footing before making a huge commitment.