Which Is More Helpful for Your Kids’ Financial Futures: Buying a Home or Paying for College?

Why are parents helping children buy a home?

According to the Joint Center for Housing Studies at Harvard University, median nationwide home prices recently neared historically high levels of unaffordability, and the situation can be more extreme depending on where you live. As a result, many younger adults are struggling to buy a home—and some believe they may never be able to buy a home.

The 2026 Planning & Progress study reported that 75 percent of Americans say that home ownership is essential to building wealth. Research from the Pew Research Center points to home equity as the reason—it found that almost half of the median net worth of U.S. households is in home equity.

As a result, many parents are choosing to purchase a home for a child to give them a powerful foundation to build upon as they accumulate their own wealth.

Which is more helpful to a child’s future: paying for college or helping them buy a home?

Both a college degree and owning a home can help your child build critical momentum in their early working years. Graduating without student loans allows them to start saving with a fresh slate, whereas a downpayment on a home can help them earn significant equity over time.

Many parents are shifting the value they put on home equity vs. college savings. Of the 74 percent of parents open to helping their kids buy a home or already doing so, 55 percent say it’s just as important as paying for college—and 29 percent call it more important.

Why? The right education will give your child the ability to earn an income, but a down payment on a property could potentially build more wealth than just a degree. And while college can be financed with loans, scholarships and tax-advantaged savings plans, there are fewer options to fund a home down payment.

Helping your child buy a home gives them a head start in building wealth—and the earlier they can start, the better. According to a new report by Realtor.com, someone buying a first home by age 30 will have net worth at age 50 that is 22.5 percent higher than someone who buys that home in their 40s.

So though both paying for college and helping your child buy a home can help them get ahead financially, buying a home can help give your child access to building wealth sooner, creating a strong financial foundation for them to build upon over time.

How can you help your child buy a home?

Support can come in many forms. Here are some ways you could help your adult children buy a home:

Gift an outright amount.

If giving your child money toward a down payment is possible, there may be tax advantages to doing so. In 2026, you’re able to gift up to $19,000 to your child each year without incurring any federal gift tax.

Provide them with an interest-free loan.

Giving your children a private loan for a down payment could allow you to write your own repayment terms and give them a lower interest rate. If you are loaning more than the $19,000 federal gift tax amount, make sure to set up a written promissory note with a minimum interest rate so it is not treated like a taxable gift in the eyes of the IRS.

Co-sign on the mortgage.

Co-signing on your child’s mortgage will likely allow them to afford a nicer home and get better interest rates than their own income would permit. But you will be legally liable for the debt unless or until your child refinances down the line (so make sure you could cover the payments if needed).

How can you save to help your child buy a home?

Tax-advantaged savings plans that can be used for a child’s home purchase are less generous than retirement accounts. Still, the government provides a few options, such as:

• UGMA and UTMA accounts. These accounts allow adults to transfer unlimited assets to minors, in a custodial account, with some limited tax savings. Assets transfer to the child at adulthood, when they can use the money however they like (including purchasing a home).
• Custodial Roth account. If a child earns an income, they’re eligible to open a custodial Roth IRA, which a parent controls until the child turns 18. First-time home buyers can withdraw up to $10,000 tax- and penalty-free for a home purchase, which is an option they could access down the road.
• Trump Account. New in 2026, these custodial accounts are similar to traditional IRAs. The adult child can withdraw up to $10,000 penalty-free (but not tax-free) for a first home purchase once they turn 18.

Your financial advisor can help the whole family plan

Whether you’re saving to put children through college, fund a wedding or contribute to a down payment on a home, saving early is key. Your financial advisor can help you build a plan uniquely tailored to you that includes these savings goals—and more. They’ll also point out opportunities and blind spots along the way to help you make your money work hardest for you.