5 ways to help your child become a homeowner

Mortgage and Lending with Horizon Lending Services, LLC NMLS # 942863

Owning a home is typically the biggest financial decision any person will make. When thinking about your child's future, this probably will ring true for them as well. As a parent, it's your job to help set your child up for success and make sure that they are ready for all of the things ahead of them. When it comes to future homeownership, what can you do to help your children succeed? In this article, we’ll cover five important things that should be on your list of to-dos.


#1 Prepare Them To Inherit

Do you already own some kind of property? If your child is likely to be taking it over sometime in the future, it's worthwhile to teach them about the ins-and-outs of property ownership and management by using your property as a prime example. If you own a property already and your child will be taking it over, sit down and have a talk with them about its value, its monthly obligations, and other things they may not have thought of before.


By going into great detail with them about how to manage and own this property, you can help your child realize the many things they'll want to take into consideration when it does come time for them to manage it themselves. With some basic information, they can begin thinking about the financial commitments and the obligations of time associated with this property. However, you should also reinforce its value and whether its equity is increasing or not.


#2 Educate Them

Educating your children about finances is one of the most crucial things you can do as a parent. This means taking them step-by-step through the many expenses that come along with owning a home, whether it's the monthly mortgage payment, the mortgage insurance, water, electricity, internet, or a variety of other expenses that they will be expected to cover when it comes time for them to own their own home.


Simply educating your children on all of their future financial obligations that will go along with owning any home can help prepare them and give them a taste of reality. You should also educate them on the difference between renting and buying a home, along with the mortgage programs out there that can help them purchase a home without having to put up a substantial down payment. When they know that there are options and when they learn about affordability (monthly income vs. debt), you can ensure they have realistic expectations of their future home.


#3 Start A Fund

Affording a home can prove difficult for people of all ages. If you are in the position to help your child afford their first home, go ahead and start a savings account or investment account in their favor so that you can start putting some money away to help them afford their first home. This money can be spent on their down payment, closing costs, or on the original moving expenses that will come along with buying their first home.


#4 Gift A Downpayment

Most programs today allow family members to gift some or all of the down payment for a person's home, but even if your child ends up choosing a loan that doesn't, they can still use the money in many other ways to make the first few years of home ownership a bit easier.


If your downpayment gift is capped or if the loan program does not allow your child to get assistance with the downpayment, you can instead gift them money from your savings fund that will help cover the moving expenses or initial repairs.


#5 Get Strategic With A Roth IRA

A Roth IRA might be the perfect way for your child to break into the elusive home buying marketplace. A Roth IRA can be funded with tax dollars up to $5,500, so long as the amount doesn't exceed your child's earnings. The money you put into the Roth IRA will grow tax deferred with withdrawals being tax free during retirement, which also makes it a fantastic retirement tool.


Your child is able to take a distribution of earnings of up to $10,000 from their Roth IRA for their first-time home purchase without any penalty or taxes so long as the Roth has been held for 5 years since being set up. If it has been less than five years, there are no penalties but they will have to pay tax. If you are a taxpayer with a child, a Roth IRA can be a useful approach.


If you’re looking for loan programs with downpayment assistance, we offer FHA loans at Horizon Lending Services

Learn more about different types of home loans.


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Richie Alan Naggar
people first...then business Ran Right Realty - Riverside, CA
agent & author

This is a relevant subject. May this visit with the many....

May 14, 2018 07:58 AM #1
Nick Vandekar, 610-203-4543
Long & Foster Real Estate Inc 610-225-7400 - Devon, PA
Tredyffrin Easttown Realtors, Philly Main Line

Congrats on the feature and useful post, it is never too early to educate our children on the responsibilities of home ownership. Grand parents can also help out with those initial funds, did not know the Roth IRA allowed penalty and tax free withdrawals after 5 years for a first time purchase.

May 14, 2018 09:58 AM #3
MaryKay Shumway
The Kellstrom Ray Agency, Inc. (Est. 1948) - Sister Bay, WI
Door County Wisconsin's Real Estate Expert

Very creative post with good tips--thanks for sharing!

May 14, 2018 11:08 AM #4
SmartZip Analytics
SmartZip - Pleasanton, CA
Adam Long, Director of Enterprise Sales

Good topic and tips. I especially like that you positioned tip number one first. The advice is as practical as it is optimistic =).

May 14, 2018 11:38 AM #5
Dorie Dillard CRS GRI ABR
Coldwell Banker United Realtors® ~ 512.750.6899 - Austin, TX
Serving Buyers & Sellers in NW Austin Real Estate

Good evening Pat & Sharon Mistowski ,

Love your post and so glad to see it featured! Wise tips and a great topic to discuss. I'll be watching for more of your posts..great job!

May 14, 2018 06:59 PM #6
Laura Cerrano
Feng Shui Manhattan Long Island - Locust Valley, NY
Certified Feng Shui Expert, Speaker & Researcher

I’ve never seen this out this way in terms of helping your child own a home. Really excellent!

May 14, 2018 10:19 PM #7
Andrew Mooers | 207.532.6573
Northern Maine Real Estate-Aroostook County Broker

Get them started early and to start owning, not renting.

May 15, 2018 03:13 AM #8
James Grant
Asheville, NC

Hello, Pat and Sharon, I love your post it is a good way to prepare and help your kids for their future. Thanks for sharing!

May 15, 2018 07:37 AM #9
Denise Copeland
Mirsky Realty Group - Palm Beach Gardens, FL
Jupiter Abacoa Sales & Beach Front Luxury Homes

Really hoping my daughter decides to invest in real estate for her future! Great article - thanks for sharing.

May 15, 2018 07:56 AM #10
Ricardo Mello
Manhattan Miami Real Estate - Manhattan, NY
Manhattan & Miami Real Estate Agent

Excellent subject!

May 15, 2018 08:11 AM #11
Dan Tabit
Keller Williams Bellevue - Sammamish, WA

With the ever increasing cost of homes, this is very relevant information. 

May 15, 2018 10:07 AM #12
Mary Hutchison, SRES, ABR
Better Homes and Gardens Real Estate-Kansas City Homes - Kansas City, MO
Experienced Agent in Kansas City Metro area

I see so many parents now 'gifting' their child money as a DP for a home. The younger kids can have so much school debt and wages have been stagnent for years. Everyone needs a home--strategize early to buy eventually. Even if it's not used by the owner, can be rented!

May 15, 2018 08:45 PM #13
Georgie Hunter R(S) 58089
Hawai'i Life Real Estate Brokers - Haiku, HI
Maui Real Estate sales and lifestyle info

My parents set a great example for me and I've benefitted from that.  Congrats on the feature.

May 15, 2018 10:43 PM #14
Matthew Klinowski, PA
Downing-Frye - Naples, FL
Golf Community Real Estate Specialist

Pat and Sharon, thanks for sharing this excellent post. Congratulations on being featured. Have a great day.

May 16, 2018 04:56 AM #15
Theresa Hus
RealEstateAgent.com - Hollywood, FL
The Official Real Estate Agent Directory

Number 2 is so important... Doing this will help them become a homeowner and also more responsible individuals. It's always good to bring finances into people's lives early on. Don't do it when they're teens!

May 16, 2018 06:36 AM #16
John Wiley
Right Move Real Estate Group- EXP Realty - Fort Myers, FL
Lee County, FL Real Estate GRI, SRES,GREEN,PSA

Educating your children to financially savvy is so important.

My father taught me how to make money and save it. This resulted in my buying and selling my first house when I was 16.


May 16, 2018 08:59 AM #17
Kat Palmiotti
Grand Lux Realty, Monroe NY, 914-419-0270, kat@thehousekat.com - Monroe, NY
The House Kat

It's so important for young people to learn financial management skills - knowing how to save money, and how to budget, will be critical skills when they are ready to purchase and maintain a home.

May 16, 2018 10:08 AM #18
Jeff Dowler, CRS
Solutions Real Estate - Carlsbad, CA
The Southern California Relocation Dude

This is such a useful post - congrats on the feature. It’s becoming more challenging, at least in our area, for first time buyers becuase of prices, but getting prepared financially, and emotional, is key. There is a lot a parent or parents can do to help their kids be prepared - we helped both our kids financially, and otherwise, and I also acted as my older daughter’s buyer agent in LA when they bought. 


May 17, 2018 04:49 AM #19
Paula Hathaway, REALTOR, LBA
Douglas Elliman Real Estate - Southampton, NY
...The Most Informed Agent In The Hamptons!

Great post and one that is really needed. How many times have you seen young people in a bad situation with their money simply because no one took the time to sit down and discuss it! Sometimes it is a simple matter of being afraid you will guide them in the wrong way--well guidance is necessary and if it is not the most accurate guaidance a creative mind will figure that out--give them a chance at least to get the best you can offer to them...that includes what you do with you money. They will learn so much from your experience and they will never forget it!

May 17, 2018 07:40 PM #20
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Sharon Mistowski

Horizon Lending Services, LLC
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