Ways parents can help their adult children buy a home

Is it time for your son or daughter to leave the nest? Are you prepared to offer assistance so that your adult child can purchase his or her first home? If your adult child is unable to buy a home on his or her own, odds are Mom and Dad can help. Here are some ways you can help your adult child buy a home:

• Assist in paying the down payment. While lenders will want to know that the homebuyer is receiving financial help from a family member, contributing cash toward the down payment is a common way for a parent to help out.

• Going on the title as a co-owner. This allows the first-time home buyer to build up a credit history as well as reap the tax benefits of owning a home. But it won’t work if the parent has poor credit history or excessive debt. Co-owning the property is a big responsibility that should be discussed with a lawyer before any papers are signed.

• Co-sign the loan. This is a workable, but potentially risky, solution that leaves open the possibility that the parents credit score could be damaged by their offspring’s actions. Consider the risks as a family carefully.

• Buy the home and rent it back to the child. A popular choice, if you can afford it. This leaves the property under the parents’ ownership and control.

When your adult child can’t afford to purchase a home of his or her own, and is tired of paying rent or living in his or her childhood bedroom, a parent’s help might get them out of the nest and into homeownership.