Can You Buy A Home And Have A Family Gift The Equity Towards Down Payment?
So you have been thinking of buying a house to live in. Your family is here and there is a family owned home where Grandpa/Ma is ready to downsize. Talks have been happening between family members, and you are presented with an opportunity to buy the house and Grandpa/ma will gift the down payment through the equity in their house. Is this allowed you all say?
The answer is a resounding YES! How this works, of course starts with the agreement to purchase the home at a set price. Then from there they decide how much equity they will gift you. You will then want to get pre-approved to buy the house through a lender (like us). Make sure the lender knows how this works and can help facilitate this for you. Because in all likelihood there may not be a real estate agent involved. If the lender doesn’t know how to facilitate this, find a new lender, I kid, well not really.
The real estate contract has to be written a certain way. And if this is not done properly everything will unravel at the closing table. Now of course your family member should consult with their C.P.A to determine the tax implications of this decision. However I can tell you that twice in the last 30 days we have helped people through this process, and it has been an amazing opportunity that worked out well for all parties. What usually happens is the buyer ends up buying under market value and so the family can ensure the home stays in the family long-term. If you would like to learn more let us know~