Parent Child Mortgage Agreement

If you`re thinking about helping your child purchase a home, a parent-child mortgage agreement may be a good option to consider. This type of agreement allows parents to lend money to their child to help them with their down payment or to purchase the home outright.

What is a Parent-Child Mortgage Agreement?

A parent-child mortgage agreement is a legally binding contract between a parent and their child. The parent lends the child money to purchase a home and the child agrees to pay back the loan over a set period of time, typically with interest.

Benefits of a Parent-Child Mortgage Agreement

There are several benefits to using a parent-child mortgage agreement.

Firstly, it can be an excellent way for parents to help their children without giving them a large lump sum of money. Instead, the child can pay back the loan over time, making it a more manageable situation for everyone involved.

Secondly, a parent-child mortgage agreement can help the child qualify for a larger loan amount. By contributing to the down payment, the child may be able to qualify for a better interest rate or a larger loan.

Finally, a parent-child mortgage agreement can be a great way to build family wealth. The parents can earn interest on the loan, which can help them achieve their financial goals, while helping their child purchase a home.

Considerations for a Parent-Child Mortgage Agreement

Before entering into a parent-child mortgage agreement, it`s important to consider a few key factors.

Firstly, both parties should agree on the terms of the contract, including the interest rate, repayment period, and any other stipulations. It`s important to document the terms in writing to avoid any misunderstandings or disagreements down the line.

Secondly, both parties should be aware of the potential tax implications. The parents may need to declare the interest earned on the loan as income and the child may be eligible for tax deductions related to the interest paid on the loan. Consulting with a tax professional is recommended.

Finally, it`s important to consider the potential impact on the parent`s finances. If the parents need the money for their own retirement or other financial goals, lending money to their child may not be the best option.


A parent-child mortgage agreement can be a great way to help your child purchase a home, while also achieving your own financial goals. However, it`s important to carefully consider the terms of the agreement and the potential impact on both parties before entering into a contract. Seeking the advice of a financial or legal professional can also be helpful in making the best decision for your situation.