A lot of BC parents want to help their kids into a first home while they are here to see it. Their money is in their house, so the question becomes: can they use their home equity to fund a down payment gift? Often yes, but the details matter on both sides, the parents' borrowing and the child's mortgage.
How parents usually free up the money
- A HELOC or refinance, if they qualify on income and can handle the payments.
- A reverse mortgage, if they are 55 or older and do not want monthly payments. Lenders ask what the money is for, and helping family is a common answer.
- Savings or investments, which may be simpler if available.
What the child's lender typically wants
- The gift comes from immediate family, like a parent.
- A signed gift letter confirming the money does not need to be repaid.
- Proof of where the money came from, and proof it is in the child's account, often 15 to 30 days before closing.
Two things that trip families up
It has to be a gift, not a loan. If repayment is expected, the child's lender usually treats it as debt, which can hurt their qualifying and usually means it cannot count as the down payment.
Where the gift came from. Some lenders look closely when the parents borrowed the money they are gifting. A gift funded by a reverse mortgage is common, but have the child's lender or broker confirm they will accept it before the parents take out the money.
Keep it fair between siblings
If one child gets help now, decide how that fits with the others. Some families give each child the same amount now. Some treat it as an advance on the inheritance and write that into the will. Some accept it is unequal and explain why. Whatever you choose, write it down, and have a lawyer help with the wording.
Protect the gift
Once it is given, it is the child's money. If the child is married or in a relationship, ask a lawyer how a gift is treated if the relationship ends, and whether any paperwork can help protect it.
A $50,000 gift toward a $500,000 first home is a 10% down payment. If the parents fund it with a reverse mortgage at an illustrative 7% compounded twice a year, that $50,000 grows to about $99,000 owed after 10 years if nothing is repaid. Not a quote.
Questions people ask
Can my parents gift me a down payment from their home equity?
Often, yes. The parents borrow against their home, and the child's lender needs a gift letter and proof of funds. Confirm with the child's lender first that they will accept a gift funded by borrowing.
Can my parents lend me the down payment instead?
Usually not for the down payment itself. If repayment is expected, lenders generally treat it as debt. A gift with a gift letter is the normal route.
Is there tax on a gift from my parents?
Canada has no gift tax on cash gifts, but gifts of property and income earned on gifted money can have tax effects. Ask an accountant.
About the author
Matt Blake is a licensed mortgage broker in British Columbia with BRX Mortgage Inc. He helps families whose parents are house rich and cash poor compare every option, from HELOCs and downsizing to reverse mortgages, with the parents in charge of every decision. He will tell you straight when a reverse mortgage is the wrong move.
Licence MB600487 · BRX Mortgage Inc., brokerage licence X301291 · Last reviewed October 2026
Get everyone on the same page
The free Living Inheritance Guide covers every option side by side, the paperwork, and a family meeting plan. Then book a family call with your parents on the line, if and when you are ready.