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Private Wealth

Three ways to help buy a house for a family member

Here are things to consider when buying a house for a family member, including financial assessment and assistance options.5 min read

Key takeaways

  • Assess your financial readiness first by reviewing your net worth, liquidity, spending needs, and long-term goals before helping a child buy a home.
  • Choose the right type of support — whether a gift, a family loan, or a trust — based on tax, legal, and asset protection considerations.
  • Plan carefully and work with financial, tax, and estate professionals, as each option can affect taxes, family dynamics, and asset protection.

Given current home prices, and the interest rate environment, first-time homebuying could be challenging for someone in their 20s or 30s. And those looking to upgrade to a larger home or move to a better school district for their growing family may feel the pinch, too. As a parent or grandparent, you may have the financial resources to help a family member.

Here are a few considerations you should factor in as you determine whether helping a child or grandchild purchase a home is financially right for you.

“The most important thing is to discover whether you can afford to assist a child or grandchild,” says Bob Petix, senior wealth strategist for Wealth & Investment Management, Wells Fargo Clearing Services, LLC, “Here at Wells Fargo, your advisor can run an analysis of your wealth plan to see what impact such a commitment could have on your long-term goals.”

As you consider your options, you can factor in scenarios like your anticipated retirement date and integration of your other major life goals. Several factors come into play when considering the feasibility of assisting with the house purchase, says Petix:

  • How much is required
  • Your net worth
  • Your spending rate
  • The liquidity of your assets
  • The tax status of your wealth (for example, will funds be coming from taxable or tax-deferred accounts?)

Below are three common approaches to helping a family member purchase a home.

For additional support, contact your advisor.

Don’t have an advisor?

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Wealth & Investment Management (WIM) offers financial products and services through bank and brokerage affiliates of Wells Fargo & Company. Bank products and services are available through Wells Fargo Bank, N.A. Wells Fargo Trust is a part of WIM and offers services through Wells Fargo Bank, N.A. and Wells Fargo Delaware Trust Company, N.A.

Wells Fargo & Company and its affiliates do not provide tax or legal advice. This communication cannot be relied upon to avoid tax penalties. Please consult your tax and legal advisors to determine how this information may apply to your own situation. Whether any planned tax result is realized by you depends on the specific facts of your own situation at the time your tax return is filed.

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