Tips for Homebuying with Family Members

Marci • April 10, 2019

Pooling resources with parents or siblings opens possibilities when it comes to buying a home everyone can afford. Homebuying requires careful planning though, since there’s so much at stake—and money is the least of it; we’re talking love and loyalty here.

If you want to buy a home with family members (and still be on speaking terms during family functions) this is what you need to consider.

Answer this: Why are you moving in together?

Perhaps mom and dad need to downsize and want to be closer to their children. Maybe one of those children needs after-school care for the kids, or someone has gone through a divorce and needs family support…

Besides saving money, families considering buying a home together often have non-financial issues that make it a good choice. Agree on how you’ll all help each other—cooking communal meals; driving parents to medical appointments or kids to school; etc.

Now you need to separate those personal arrangements from the legal aspects of buying a home together. This isn’t Thanksgiving dinner, it’s business.

Hire a lawyer.

All homebuyers should use a lawyer, and that’s especially true for families buying together. Be prepared to spend more on legal services too. Why? There’s more to cover.

The following commitments and promises should be considered when preparing binding legal documents.

Disclose your financial standing.

All potential co-owners should share their credit report (it’s free  here ) with the group. You may want wine for this meeting.

If you’re applying for a mortgage together (the  Family Plan Program  is designed to help with this) you need to know where each person stands to determine how that could impact all family members.

Be prepared to tell your clan how much you have for a downpayment and how much you can pay monthly. Add up everyone’s contribution and use our calculator  here  to figure out how much family home you can afford.

Imagine the future.

A home should be a long-term commitment, but life happens: job loss or out-of-town promotion, a baby, illness—those are just a few things that impact your life. Discuss what impact they could have on your housing arrangement.

For example, under what circumstances could the property be sold? For instance: What happens if not all co-owners want to sell at the same time?

Consider setting a minimum amount of time that everyone will commit. (Your mortgage term is a good place to start.) Then plan for what could happen after that.

For example, you may want to do some research around what financial options are available to you when one owner wishes to leave – such as buying out that owner’s share. Or, the empty unit could be rented to generate income that would pay back, over time, the owner who wanted to sell.

The solutions will be as unique as your family. Talk it all through first.

Consider upkeep and upgrades.

Decide how to cover emergency expenses, like a roof or HVAC repair, and less urgent improvements, such as exterior painting.

An easy approach is to open a high interest-rate savings account and have everyone contribute to it monthly.

Here’s where things get tricky: Let’s say you want to upgrade bathroom and kitchen fixtures. That will make your personal space extra nice, but it could also improve the building’s energy efficiency and resale value. Will all family members contribute financially to your upgrades?

These may seem like details for later, but small grievances can snowball into big resentments. Tackle them before signing day. And remember, for any transaction of this nature, it is crucial to consult with a mortgage professional before proceeding.

Contact me anytime, I would love to point you in the right direction.

 

This article was written by Genworth Canada   and first appeared on their website here. 

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By Marci Deane April 30, 2025
Your downpayment refers to the initial payment you make when buying a property through mortgage financing. A downpayment is always required when purchasing, because in Canada, lenders are only allowed to lend up to 95% of the property value, leaving you with the need to come up with at least 5% for a downpayment. In fact, securing mortgage financing with anything less than 20% down is only made possible through mortgage default insurance. Canada has three default insurance providers: the Canadian Mortgage and Housing Corporation (CMHC), Sagen (formerly Genworth Canada), and Canada Guaranty. There is a cost for default insurance which is usually rolled into the total mortgage amount and is tiered depending on how much you put down. As your downpayment can be a significant amount of money, you probably need a plan to put this money together. So, let’s take a look at some of the options you have to come up with a downpayment. Money from your resources If you’ve been saving money and have accumulated the funds and set them aside for to use for your downpayment, you'll need to prove a 90-day history of those funds. As far as the lender is concerned, this is the most straightforward way to prove a downpayment. Any large deposits to your bank account that aren’t from payroll will require you to prove the source of funds. For example, if you recently sold a vehicle, you’ll need to provide the paperwork as proof of ownership, which corresponds to your account’s deposit. Or, if you have funds in an investment account that you’ve transferred over, statements of that transfer or account would suffice. You have to prove the source of your downpayment funds to the lender when qualifying for a mortgage to help prevent money laundering. Funds from the sale of another property If you’ve recently sold a property and you’re using the proceeds of that sale as the downpayment from your new purchase, you can provide the paperwork from that transaction to substantiate your downpayment. RRSPs through the Home Buyer’s Plan Okay, so let’s say you don’t have all the money set aside in your savings, but you do have cash in your RRSP. Assuming you’re a first-time homebuyer, you can access the funds from your RRSP Tax-Free to use as a downpayment. You’re able to access up to $35k individually or $70k as a couple. The money has to be paid back over the next 15 years. If you’d like more information on what this program looks like, please get in touch. Gifted downpayment Now, if you don’t have enough money in your savings, but you have a family member who is willing to help, they can gift you funds for your downpayment. With the increased cost of living, making it harder to save for a downpayment, receiving a gift from a family member is becoming increasingly commonplace. Now, to qualify, the gift has to come from an immediate family member who will sign a gift letter indicating there is no schedule of repayment and that the gift doesn’t have to be repaid. Proof that the money has been deposited into your account is required through bank statements. Gifted funds can make up part of or the entire amount of downpayment. For example, if you purchase a property for $300k and have $10k saved up, your parents can gift you the remaining $5k to make up the total 5% downpayment. Borrowed downpayment Suppose you aren’t fortunate enough to have a family member who can gift you a downpayment, but you have excellent credit and a high income compared to the amount you’re looking to borrow. In that case, you might qualify to borrow part or all of your downpayment. It’s possible to borrow your downpayment as long as you include the payments in your debt service ratios. Typically this is 3% of the outstanding balance. So there you have it, to qualify for a mortgage, you’ll need to come up with a downpayment. That can be through your resources, a property you sold, an RRSP, a gift from a family member, borrowed funds, or a combination of all five sources. If you’d like to discuss your downpayment or anything else related to mortgage financing; it’s never too early to start the conversation about getting pre-approved for a mortgage. Please connect anytime. It would be a pleasure to work with you!
By Marci Deane April 23, 2025
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By Marci Deane April 16, 2025
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