Smart Alternatives to Co-Signing Your Child’s Mortgage in Ontario

If your adult child is ready to buy a home but can’t quite qualify on their own, your first instinct might be to co-sign or guarantee the mortgage.But before you tie your financial future to theirs, it’s worth exploring other ways to help — ones that support your child without putting your credit or borrowing power at risk.

Here are five practical alternatives Ontario parents are using to help their kids enter the housing market safely and strategically.

1. Gift Part (or All) of the Down Payment

One of the biggest barriers for first-time buyers is saving a down payment.If you’re in a position to help, a gifted down payment can make a huge difference.

✅ Why it works:

• A larger down payment improves your child’s debt ratios and helps them qualify more easily.

• It can also reduce or eliminate default insurance premiums if they reach the 20% mark.

⚠️ What to watch for:

• The lender will need a gift letter confirming the money is a true gift (not a loan).

• Some families set up informal repayment plans — that’s fine, but disclose nothing to the lender if it’s a gift on paper.

💡 Pro Tip: If you’re gifting funds from your home equity, consult your mortgage professional to ensure the new debt doesn’t affect your own financial goals.

2. Use a Home Equity Line of Credit (HELOC) — Strategically

Instead of co-signing, you could use a HELOC on your existing home to provide a down payment loan to your child.

✅ Why it works:

• You maintain full control of your borrowing.

• You can structure repayment terms that work for both of you.

• It keeps your child’s mortgage separate from your own credit obligations.

⚠️ What to watch for:

• Your lender may need proof that the funds are for a family loan or gift.

• Interest rate fluctuations can impact affordability — especially if rates rise.

💡 Pro Tip: Set up automatic repayments from your child to you to keep the arrangement clear and professional.

3. Consider Co-Ownership with Clear Boundaries

If you want to build family wealth together, co-owning the property can be a powerful strategy — when done right.

✅ Why it works:

• You can own a portion of the home (e.g., 50/50) and share in equity growth.

• Your contribution helps them qualify without taking on full mortgage responsibility.

• It can be structured to protect your share for future inheritance or investment goals.

⚠️ What to watch for:

• Always have a co-ownership agreement drafted by a lawyer.

• Outline how expenses, profits, and exit strategies will work in advance.

💡 Pro Tip: Title ownership can affect estate planning and taxes, so review this with your accountant first.

4. Help with Debt Consolidation or Credit Repair

Sometimes your child doesn’t need a co-signer — they just need a financial tune-up.

✅ How you can help:

• Pay off high-interest debts (credit cards, car loans) that inflate their ratios.

• Guide them to build a stronger credit score through consistent payments.

• Connect them with a mortgage broker who can review pre-qualification options.

💡 Pro Tip: Even small improvements in credit and debt ratios can make a big difference in approval and rate eligibility.

5. Explore Government and First-Time Buyer Programs

Ontario and federal programs can lighten the load for your child:

• First Home Savings Account (FHSA): Tax-free contributions up to $8,000/year.

• RRSP Home Buyers’ Plan: Borrow up to $35,000 tax-free from RRSPs.

• First-Time Home Buyer Incentive: Shared-equity program with CMHC.

• Land Transfer Tax Rebates: Reduces upfront costs at closing.

Encourage your child to maximize these before you step in financially — sometimes, that’s enough to close the gap.

When to Involve a Mortgage Professional

Every family’s situation is unique. The best solution depends on:

• Your income, equity, and retirement plans

• Your child’s credit and employment stability

• Lender policies and the property type

A qualified mortgage broker can help model different options — from co-signing to HELOC support — so you can see the impact on both of your financial pictures before you decide.

Final Thoughts

Helping your child buy a home doesn’t always mean signing their mortgage.With the right structure, you can give them a head start without putting your own financial future at risk.

At LaframboiseMortgage.ca, we regularly help families find creative, lender-approved strategies to make homeownership achievable for the next generation — safely and smartly.

👉 Book a quick consultation today to explore your options before you commit to co-signing.