Your kids have been wonderful to you. Not much trouble, always did their chores and never fought. Much. But now they're all grown up and are ready to take the next big step, buying a home. And they need your help.

There are two basic ways to help your kids: Give them money or co-sign their mortgage. Let's look at both options.

Giving a financial gift demands just a little due diligence on everyone's part, but the typical requirements are that the gift comes from a family member, and not someone outside the clan. The reasoning behind this is that a family member is more likely to "give" funds while strangers give what usually turns out to be a "loan." A loan is a debt that must be reported to lenders. A loan is also something which must be repaid, and a loan with monthly payments can affect the borrower's debt ratios and ability to repay their mortgage on time.

Another qualification for giving gifts is that the borrowers need to have at least funds saved up from their own accounts, usually anywhere from 3- to 5-percent of the purchase price. If the new home costs $100,000 the borrowers will need to document that they have $3,000 to $5,000 saved up in an account that they've had for a while. These funds can be used for the down payment or closing costs, but they'll still need to be verified for most conventional and government loans. One side note -- if the gift represents 20 percent of the sales price, the borrowers typically need to have nothing at all in terms of money in the bank.

One last item regarding gifts, the lender would like to see a signed Gift Affidavit. This form is signed by the family member giving the money stating that they have the ability to give such funds and they are giving the money with no expectation of getting it back. In other words, it's not a loan.

Another way parents can help is to co-sign the mortgage. Here, you agree that if the home buyers default on their mortgage you will make the payments on time. This is no big deal either, but there are a couple of things you need to know.

First, even though you co-sign on the mortgage to help other qualify, the buyers still need to have debt ratios within certain parameters. This means that even though a lender will use your income to help children qualify, the lender also wants to see a reasonable debt load for the primary home buyer.

Second, remember that the mortgage you co-sign will appear on your credit report, and may be counted against you when you apply for future credit.

Some lenders, but not all, will waive a co-signed debt when considering a loan application, but only if you can provide canceled checks from the primary borrowers from the twelve months.

There can be opportunities to provide children with up to $10,000 from retirement funds. The rules here -- and with other big gifts -- can be complex, so speak with a tax adviser before making a withdrawal.