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Gift of Equity Loan
A Gift of Equity Loan allows a home to be sold between family members, using the equity difference as a down payment. This type of loan is commonly used to help first-time homebuyers or younger generations purchase a home with little to no out-of-pocket costs. By leveraging the home’s equity as a gift, buyers can reduce or eliminate the need for a traditional down payment, making homeownership more accessible. If you’re looking for a way to buy a family home with built-in equity, a Gift of Equity Loan could be the perfect solution.
A Reliable Home Loan You Can Trust.
No Out-of-Pocket Down Payment
Equity gifted by the seller can cover the down payment.
Family-Centric Transactions
Ideal for keeping a home within the family or helping relatives become homeowners.
Simplified Purchase Process
Eliminates competition and negotiations common in traditional home buying.
Potential Tax Advantages
Depending on circumstances, both buyers and sellers may benefit from favorable tax treatment.
Loan Guidelines
If your details are near these guidelines, we encourage you to apply or reach out. Even if you don’t qualify for a 30-year fixed-rate mortgage, we may have other options available.
The Home
Purchase a new home or refinance your current mortgage.
Credit Profile
A credit score above 620 is typically required.
Debt-to-Income
Your debt-to-income ratio (DTI) should be under 50%.
Closing Costs
Along with your down payment, you’ll need sufficient funds to cover closing costs.
Explore Your Potential
Our calculators help you understand and visualize your options
Mortgage Calculator
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Refinance Calculator
Considering refinancing your mortgage? Find out how much you could save.
Frequently Asked Questions
Have questions? We’ve got answers! Explore our FAQ section to find helpful information about loans, refinancing, and more. If you don’t see what you’re looking for, feel free to contact us—we’re here to help!
Who are Gift of Equity Loans best for?
Gift of Equity Loans are ideal for homebuyers purchasing a property from a family member at a discounted price, where the “gift of equity” helps cover the down payment or closing costs.
How do Gift of Equity Loans work?
A Gift of Equity Loan allows a seller (usually a family member) to provide a portion of their home’s equity as a gift to the buyer. This amount can be applied toward the buyer’s down payment or closing costs, reducing the cash needed upfront. The transaction must be documented with a formal gift letter.
What are the pros and cons of a Gift of Equity Loan?
Pros:
- Reduces or eliminates the buyer’s need for a down payment.
- Facilitates a family-based property transfer at favorable terms.
- Helps buyers qualify for loans they might not afford otherwise.
Cons:
- Requires a formal appraisal and documentation.
- Limited to transactions between family members.
- May have tax implications for the seller providing the gift.
Does a Gift of Equity affect the loan amount I can qualify for?
Yes, the gifted equity lowers the effective purchase price and can reduce the loan amount needed. This can help borrowers qualify more easily.