Helping Your Child Buy a Home in Ontario: Co-Signing, Joint Tenancy, and Bare Trusts

The short answer: Parents in Ontario can help a child buy a home by gifting a down payment, co-signing or guaranteeing the mortgage, or going on title with them as joint tenants or tenants-in-common. Each option carries different legal, tax, and borrowing risks, so parents should understand how it affects their own finances and estate before signing.

Skyrocketing home prices and strict mortgage qualification rules have made it increasingly difficult for young adults to buy their first home on their own. That reality has changed the role of the so-called "Bank of Mom and Dad," which now stretches well beyond down payments.

How can parents help their child buy a home?

A poll reported by CTV News found that roughly 40 percent of parents of younger Ontario homeowners say they helped their children financially with the purchase. Parental involvement has become the norm rather than the exception.

The most common ways to help are:

• Gifting a down payment. Lenders typically want a signed gift letter confirming the money is a gift and not a loan.
• Co-signing or guaranteeing the mortgage. This is often needed just to meet a lender's income and stress test requirements.
• Going on title as a co-owner. You become a legal owner of the home alongside your child.

Is co-signing the same as going on title?

No, and it's an important difference. Co-signing is about the mortgage: the parent agrees to be responsible for the debt if the child can't pay. Going on title is about ownership: the parent becomes a legal owner of the property. Depending on the lender and the deal, a parent may do one or both, so ask your lawyer and lender exactly what's being signed.

Joint tenancy vs. tenants-in-common: what's the difference?

If a parent goes on title, there are two main ways to hold it:

What are the risks of joint tenancy with your child?

Joint tenancy can work well, but keep these risks in mind:

• The mortgage counts as your debt. Your child's mortgage will show up on your credit and can affect your own borrowing.
• Your child's problems can become yours. A divorce, bankruptcy, or lawsuit involving your child could affect a property you co-own.
• You share control. Selling the home generally requires everyone on title to agree.
• Survivorship may not match your wishes. If you have more than one child, the home passing to just one of them outside your will can cause conflict.
• There may be tax consequences, including capital gains. Talk to an accountant about your situation.
• Your intentions should be in writing. Whether your contribution is a gift, a loan, or a shared investment matters a lot if there's ever a dispute.

We cover more on this in Pitfalls to Avoid in Joint Property Ownership.

What is a bare trust, and can parents use one?

A bare trust exists when one person holds legal title to an asset but someone else is the true, or "beneficial," owner. In a home purchase, a parent may go on title to help the child qualify for financing, while signing a declaration that they have no beneficial interest in the home. 

According to the Globe and Mail, the idea is that the parent isn't treated as owning the home as an asset, and it may keep the home from triggering capital gains for the parent at death. Because the child is the real owner and lives in the home, the child may also be able to use the principal residence exemption when they eventually sell.

A bare trust only works if it reflects reality: the child pays, owns, and lives in the home, and it's properly documented.

Do bare trusts have to file tax returns?

The rules have been changing. The Canada Revenue Agency (CRA) has relieved bare trusts from filing a T3 return for recent years, but certain bare trusts may need to file starting with the 2026 tax year, and proposed legislation would exempt some parent-on-title arrangements. Ask your accountant what applies to you.

What does McMurter & Associates recommend?

When a family member co-signs on a purchase, we often advise clients to hold title as joint tenants. If one co-owner passes away, the survivor automatically becomes the sole owner, which avoids probate and can help minimize certain tax implications, making the transition smoother and more cost-effective.

The right choice always depends on your family, so speak with a lawyer before deciding. This is different from a parent adding a child to the title of the parent's existing home, which we generally advise against. 

What should parents do before helping their child buy a home?

1. Decide whether the money is a gift or a loan, and put it in writing.
2. Ask the lender what they require from a co-signer or co-owner.
3. Choose the right title structure with your real estate lawyer.
4. Ask whether being on title affects first-time buyer rebates or programs your child might otherwise qualify for.
5. Review your will and estate plan, and your child's, so everything works together.
6. Speak with an accountant about capital gains and reporting.
7. Consider a written agreement setting out who owns what and what happens if someone wants out.

Contact

Brian McMurter is a real estate and estate planning lawyer at McMurter & Associates in Whitby, helping Durham Region, Ontario residents with estate planning and real estate law. 

Contact McMurter & Associates Monday to Friday, 9 a.m. to 5 p.m. at info@mcmurter.com or call 1 800 756 7138 or 905 666 9200 to schedule a consultation.

Disclaimer: This article is meant to inform and educate. It is not legal or tax advice. If you have questions about real estate transactions, wills, or estates, please speak with a trusted lawyer.