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Leslie Sherman and her husband Conrad Useldinger never imagined they would own a home. The couple live in San Jose, CA, one of the fastest-moving and most expensive housing markets in the country, and they had accepted they would be renters for life. That is, until Leslie’s parents made an offer: Let’s buy a home together.
Across the country, families like the Shermans are forging new paths to homeownership—ones that blend financial support with co-ownership, legal contracts, and sometimes, family negotiations that rival real estate closings in complexity. The reasons are clear: High home prices, stubborn interest rates, and generational wealth disparities have made it nearly impossible for many first-time buyers to get in the game without help.
But stepping in as a parent isn’t as simple as writing a check. Today’s family-financed home purchases come with financial, legal, and emotional considerations that can affect everyone involved.
Why more parents are getting involved
The numbers tell a clear story. In 2024, just 24% of homebuyers were purchasing their first home, the lowest share on record since 1981, according to the National Association of Realtors®.
That’s not for lack of interest. Instead, it’s a direct result of affordability barriers that even two full-time incomes can’t always overcome. Rising mortgage rates, persistent student debt, and home prices that have refused to fall in meaningful ways are making it nearly impossible for younger generations to buy without a financial boost.
That’s why parents are increasingly stepping in as co-investors, co-signers, and co-owners. From 1994 to 2022, the proportion of young homebuyers relying on a co-signer of an older generation more than doubled from 1.6% to 3.7%, according to analysis from Freddie Mac. The trend is even more marked among the youngest homeowners with as much as 38% of Gen Z homebuyers getting help from their parents to make their first home purchase, according to a Credit Karma and Intuit study.
Even in more affordable markets, parental support is becoming the hidden engine behind many first-time purchases. While the list of top markets for first-time buyers in 2025 from Realtor.com® includes relatively accessible areas like Rochester, NY ($129,900 median listing price) and Harrisburg, PA ($140,000), even those price tags can be daunting for buyers in their 20s and 30s.
In these cases, the help might not be as dramatic as an $850,000 condo split four ways—as in the case of the Shermans—but a smaller gift, a co-signed loan, or even a symbolic show of financial backing can mean the difference between a winning offer and another year of renting.
The many forms of support—and what each one means
There’s no one-size-fits-all way for parents to help their kids buy a home. From behind-the-scenes financial boosts to full-blown co-ownership, today’s family-backed purchases take many forms and each comes with its own legal, financial, and emotional implications.
Gifting a down payment
The most common way parents help is by contributing to the down payment, often in the form of a gift. In 2025, the IRS allows individuals to gift up to $19,000 per recipient without triggering the gift tax. If the gift exceeds that threshold, the donor may need to report it to the IRS, though many won’t owe taxes unless they’ve already used up their lifetime exclusion of $13.99 million.
But for the gift to pass muster with a lender, it can’t be informal. Most mortgage underwriters will require a signed gift letter from the parents stating that the money is a gift, not a loan, and that it doesn’t need to be repaid. Lenders may also ask for bank statements and transfer records to verify the source and movement of the funds. If that paperwork isn’t clear, it can slow down or even jeopardize the loan approval.
Co-signing a mortgage
For parents whose children are struggling to qualify for a mortgage—whether due to limited credit history or a high debt-to-income ratio—co-signing the loan can be an easy way to help. While no cash changes hands upfront, the financial risks are real.
When you co-sign, you’re not just vouching for your child, you’re legally on the hook. If they miss a payment or default, your credit will take the hit, and lenders can come after you for repayment. It can also introduce emotional complications: Who’s really in charge when you’re both liable for missed payments? If boundaries and expectations aren’t clearly set from the start, the line between helping and overstepping can quickly blur.
Co-ownership or buying outright
Some families go even further and buy the home together, as the Shermans did. In these cases, all parties are typically listed on the deed, and ownership is often structured as a Joint Tenancy With Right of Survivorship (JTWROS) or Tenants in Common (TIC). In a JTWROS agreement, ownership is equal among all parties and is automatically transferred upon death, while a TIC allows for unequal ownership shares and lets each party designate their own heir.
In recent years, more families have also opted for a shared equity agreement, a more customizable co-ownership model that outlines exactly who owns what and how future gains (or losses) will be divided.
Shared equity agreements are especially useful when the parent contribution is substantial but not purely a gift. In the Sherman family’s case, the parents covered 75% of the purchase price and hold 75% ownership. When the home sells, that same ratio will determine how proceeds are split.
From support to strings: Setting boundaries and expectations
For many parents, helping a child buy their first home feels like a natural extension of love and support. But when money changes hands without clear agreements, even close families can run into trouble.
Tension doesn’t always start with big disagreements; it can creep in through everyday decisions. A parent who contributed to the down payment might expect a say in renovations or reimbursement when the home is sold. A child might feel obligated to stay in a city longer than planned, unsure if the house is truly theirs.
That’s why it’s essential to put everything in writing before closing. A co-ownership agreement can help families navigate these murky waters with certainty. It should outline:
- How costs like mortgage payments, taxes, and maintenance will be split
- What happens if one party wants to sell or exit
- Whether the remaining owners get the first right to buy out the departing share
A neutral third party—like a financial planner or estate attorney—can help craft an agreement that sets clear expectations for everyone involved and avoid hard conversations later. It might not feel warm and fuzzy in the moment, but putting everything in writing is often the kindest thing a family can do for itself.