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Gift of Equity Loan
With the runup on home prices over the past decade, it can be difficult for first-time buyers to get into the housing market. A gift of equity might just be the perfect solution. Read below as we explain how this can work for you…
A gift of equity is when someone, generally a family member, sells a home to buyers at a price below fair market value. This provides first-time buyers or those with no down payment a way to purchase a home using a real estate gift from a donor.
Gift of Equity Example
Let’s say parents sell their child their home for $400,000 and it’s worth $500,000. The parents’ gift of equity would equal the difference between what they’re selling the home for and how much it’s really worth. In this case the gift of equity would be $100,000.
The $100,000 gift of equity can then be used as the child’s down payment in order to help eliminate mortgage insurance and lower the child’s borrowed loan amount.
Property Tax Considerations
Capital Gains Considerations
Gift Tax Considerations
Home Loan Considerations
Contact us if you’d like to discuss specifics on a Gift of Equity situation you may have in mind.
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