How to save for a house without the Bank of Mom and Dad

Can you buy a home without help from parents? It's a difficult prospect in some of Canada's biggest markets, but experts say there are ways to maximize your savings.

This article is part of Global News’ Home School series, which provides Canadians the basics they need to know about the housing market that were not taught in school.

The Bank of Mom and Dad — an informal financial institution open to some but not all prospective homebuyers — has become a major factor in whether or not some Canadians can break into the housing market.

Having a parent or grandparent with enough spare cash to lend towards a downpayment or help with a mortgage is a privilege afforded to a lucky few, and it’s often along these lines that young Canadians are divided between homeowners and renters.

A Statistics Canada report released in November shows that young adults whose parents own their home were more than twice as likely to be homeowners themselves, compared to the children of renters.

That report didn’t directly consider whether financial gifts were part of the trend, but it did cite separate studies about the growing prominence of intergenerational wealth transfer helping to fund home purchases.

A 2021 CIBC report, for instance, notes that the size of the average financial gift given to a family member for a home purchase was $82,000, up from $52,000 six years earlier.  

Having access to the Bank of Mom and Dad has become “very important” for would-be buyers, particularly in Canada’s most expensive housing markets, says Jason Heath managing director of Objective Financial Partners.

Part of that is due to the bleak state of housing affordability in major Canadian markets, which hit its worst levels in 41 years last quarter, according to a Bank of Canada index.