Post-college young adults who are earning a steady income are finding that buying a home can be challenging if they don't have the sufficient cash for down payment. Mitchell Barton found himself in this very scenario. He could financially support monthly mortgage payments but hadn't had enough time to save the $25,000 or so he would need for the down payment. His parents, Curtis and Bridget Barton, not only guided their son in the home buying process by introducing him to an agent who was a family friend, but also gifted the majority of the down payment. By doing so, Mitchell was able to qualify for a competitive interest rate, reduce his principal, and lower his monthly payment.

The Bartons provide a model for when it may be prudent to gift your children money. Mitchell Barton was a responsible 27-year old with an engineering job at a well-established company. Some parents may find themselves in a similar situation. Keep in mind that the IRS allows an annual gift of up to $13,000 per donee without incurring gift taxes. That means one child could receive as much as $26,000 from just mom and dad.

If your household situation resembles the Bartons', gather some additional tips on gifting towards the down payment by watching the video, "How to Help Your Child Buy a Home," on Answers.com. Since the filming of the video, the IRS has raised the individual gift limit to $13,000. Now just because parents can does not necessarily mean they should, and both parents and children need to weigh the pros and cons.

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