Should You Help Your Kids Pay Their Mortgage?

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It’s a move you might regret. 

Housing is often the average American’s largest monthly expense. This can hold true in the context of both renting and owning. But homeowners can, in some cases, be even more burdened by housing expenses than renters can be. That’s because homeowners face not only monthly mortgage payments, but also, added expenses like property taxes and homeowners insurance.

In a recent Insuranks survey, 22% of millennials and Gen Zers said that their parents have given them money in the past year to help with a rent or mortgage payment. And given the way inflation surged in 2022, it’s easy to see why so many younger adults needed that help.

But if you’re the parent of a young adult who owns a home and are being asked to help pay the mortgage, you may want to think twice about saying yes. Doing so could end up being quite detrimental to your own finances.

When helping your grown kids comes at a cost

Maybe you’re in a really solid place financially — you have loads of money in your IRA account, you don’t have debt, and you’re on track to retire when you want to. If so, then you may feel the push to write your grown kids a check to help them cover the mortgage, or another large bill, when money gets tight for them. But if you need that money yourself, then helping your grown kids pay for housing is probably something you shouldn’t be doing.

Imagine that instead of sticking $1,200 a month into your retirement plan for a year, you instead give that money to your child who’s having difficulty paying their mortgage. That could leave you with a savings shortfall by the time your career wraps up.

But even if you’re doing well enough financially, paying an adult child’s mortgage on a regular basis just isn’t a good idea. There’s nothing wrong with helping out in a pinch if you can afford to do so. If you have a child in their late 20s who owns a home and lost their job, for example, and you need to pay their mortgage for two months while they find work, so be it.

But you shouldn’t get yourself into a situation where you’re paying or subsidizing a child’s mortgage every month without an end date in sight. For one thing, that’s not teaching your child very good financial habits. And also, even if you can afford to supplement their lifestyle now, things might change once you stop working, enter retirement, and suddenly need to live off your savings. At that point, if you need to pull the plug on the mortgage help you’ve been dishing out, your grown child might fall behind on their payments and risk losing their home.

Kindness should only go so far

It’s a natural thing for a parent to want to help their child in any capacity. But while it’s okay to help with a one-off mortgage payment here and there in an emergency, you shouldn’t make a habit of helping your kids pay their mortgage. Rather, you should encourage them to buy homes that they can afford based on their own respective incomes.

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