Literacy is a broad term that includes reading and writing abilities, as well as cognitive skills that are socially and culturally constructed. Thus, it is essential to take the family context and home literacy environment (HLE) into consideration when discussing literacy. HLE affects reading and writing development via (in)formal literacy experiences focused on the development of oral language and code skills via exposure, child-centered and instructed activities. In this study, we investigated the effect of the family type (intermarriage/exogamous and co-ethnic/endogamous) and HLE on the development of literacy in bi-/multilingual children in Cyprus. The results of the study, which was based on qualitative methodology (questionnaires, interviews and observations), showed that there was a close relationship between the family type, family language policy (FLP), the HLE and the development of children’s language and literacy skills which, in addition, depended on their socioeconomic status (SES), the level of the parents’ education, life trajectories and experience, linguistic and cultural identities, status in the society, future plans for residency, and the education and careers of their children. Overall, Russian-speaking parents in immigrant contexts realized the importance of (early) child literacy experiences at home, as well as of multiliteracy and multimodality, and attempted to enhance these experiences both in Russian and in the majority language(s), mainly via formal, didactic activities focused on code skills.