{"id":606875,"date":"2026-04-16T00:48:11","date_gmt":"2026-04-16T00:48:11","guid":{"rendered":"https:\/\/www.newsbeep.com\/ca\/606875\/"},"modified":"2026-04-16T00:48:11","modified_gmt":"2026-04-16T00:48:11","slug":"canadians-co-signing-mortgages-with-parents-comes-with-risks-daily-hive","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/ca\/606875\/","title":{"rendered":"Canadians co-signing mortgages with parents comes with risks | Daily Hive"},"content":{"rendered":"

It\u2019s become more common for Canadians to learn on the bank of mom and dad to afford mortgages over the past two decades, according to a new report.<\/p>\n

The Bank of Canada analyzed mortgage contract data and credit data from TransUnion, focusing on mortgages granted to first-time homebuyers who are under 50 years old.<\/p>\n

It found that Canadian parents co-signing mortgages with their adult children have spiked since 2004. While buyers have been able to purchase more expensive homes as a result, the report argues that co-signing \u201ccan also make household finances more vulnerable, which in turn poses risks to financial stability.\u201d<\/p>\n

\"mortgages\"<\/p>\n

Lysenko Andrii\/Shutterstock<\/p>\n

More parents co-signing mortgages amid rising housing prices<\/p>\n

The report said that home prices have risen faster than incomes over the past two decades, also resulting in mortgage qualification rules becoming stricter.<\/p>\n

\u201cTogether, these circumstances have left some first\u2011time homebuyers unable to qualify for a mortgage and enter the housing market. Because of this, many have turned to their parents for help,\u201d explains the Bank of Canada.<\/p>\n

To qualify for mortgages, borrowers must be able to make a minimum down payment and be able to prove that their income can cover both their monthly debt payments and their housing-related expenses.<\/p>\n

The analysis found that of all mortgages issued to first-time homebuyers in Canada, the share of those that are co-signed with a parent has risen from four per cent in 2004 to 11 per cent in 2005.<\/p>\n

\"mortgages\"<\/p>\n

TransUnion and Bank of Canada calculations<\/p>\n

\u201cThe practice is especially prevalent in Canada\u2019s largest and most expensive housing markets, such as Toronto and Vancouver, where affordability pressures are most intense,\u201d reads the report. \u201cCo\u2011signing is also more common among first\u2011time buyers who are younger and who have lower credit scores and lower incomes.\u201d<\/p>\n

A 2025 report<\/a> found that the number of first-time homebuyers rose as receiving financial help from parents became a more common practice.<\/p>\n

Canadians who can\u2019t afford a mortgage on their own are reaching out to their parents, who can help their adult children cover the down payment by gifting them money. They can also help their kids meet the income requirement by co-signing a mortgage.<\/p>\n

\u201cIn doing so, they add their income to their children\u2019s income and provide the lender with greater legal assurance about repayment,\u201d explained the report.<\/p>\n

\u201cCo\u2011signing not only enables first\u2011time homebuyers to more easily qualify for a mortgage, but it also allows them to qualify for larger loans and purchase more expensive homes than they could on their own.\u201d<\/p>\n

How purchasing power is increased by parental co-signing<\/p>\n

According to the Bank of Canada, if parents had not co-signed their adult kids\u2019 mortgages, 74 per cent of those homebuyers would not have qualified for their current mortgage.<\/p>\n

The central bank analyzed the fourth quarter of 2022 to see what those buyers would\u2019ve been able to afford without help from mom and dad. It found that they would have been able to afford, on average, a $458,000 home.<\/p>\n

\u201cHaving a parent co\u2011sign on a mortgage raised their maximum attainable house price to $787,000. This means that parental support increased purchasing power by about 72 per cent,\u201d reads the report.<\/p>\n

The Bank of Canada noted that most adult children who had a parent co-sign took advantage of this extra purchasing power by buying homes that would have otherwise been out of reach.<\/p>\n

\"mortgages\"<\/p>\n

TransUnion, regulatory filings of Canadian banks and Bank of Canada calculations.<\/p>\n

\u201cAs a result, the average purchase price of a home for these buyers in the fourth quarter of 2022 was $709,000 \u2014 about 55 per cent or roughly $250,000 more than the maximum these buyers could have afforded on their own,\u201d reads the report.<\/p>\n

In comparison, in the same period, the analysis found that the average purchase price among first-time homebuyers without parental co-signing was $628,000.<\/p>\n

\u201cThis suggests that many of the first\u2011time buyers with co\u2011signed mortgages would likely not have been able to afford their desired home without a parent\u2019s signature on the mortgage,\u201d explained the Bank of Canada.<\/p>\n

The financial risks of parental co-signing<\/p>\n

The report argued that while parental co-signing can make homeownership more accessible to adult children, it can also lead to financial instability.<\/p>\n

According to the Bank of Canada, this is because co-signing enables many adult children to take on mortgages that they probably couldn\u2019t afford on their own.<\/p>\n

\u201cThe financial positions of both the first\u2011time buyers and their parents matter. Co\u2011signing can leave both parties more vulnerable to a sharp deterioration in either party\u2019s financial situation,\u201d reads the report.<\/p>\n

The analysis found that adult children could become financially vulnerable depending on their use of the extra spending room that parental co-signing enables.<\/p>\n

The central bank suggested that buyers with the highest utilization rate tend to have the largest average increase in delinquency rates on credit cards or lines of credit.<\/p>\n

\u201cIn other words, stretching further to buy a more expensive home appears to be associated with a higher risk of financial stress later on,\u201d explained the report.<\/p>\n

\"\"<\/p>\n

TransUnion, regulatory filings of Canadian banks and Bank of Canada calculations.<\/p>\n

According to the report, parents who co-sign are also vulnerable to financial risks.<\/p>\n

\u201cAround one\u2011third of parents who co\u2011sign a mortgage already have a mortgage of their own. By co\u2011signing, they increase their exposure to the housing and mortgage markets and may face financial pressure if their children run into repayment difficulties,\u201d explained the Bank of Canada.<\/p>\n

Co-signing parents are legally required to cover their children\u2019s mortgage payments if the child cannot.<\/p>\n

Are you a first-time homebuyer who had to get your parents to co-sign in order to qualify for a mortgage? Share your story with us at trending@dailyhive.com<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"It\u2019s become more common for Canadians to learn on the bank of mom and dad to afford mortgages…\n","protected":false},"author":2,"featured_media":606876,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[45,49,48,46],"class_list":["post-606875","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-business","tag-ca","tag-canada","tag-economy"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/606875","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/comments?post=606875"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/606875\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media\/606876"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media?parent=606875"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/categories?post=606875"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/tags?post=606875"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}