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Gift of Equity



Mortgage Hack #15


How it works: A gift of equity typically occurs when a family member has built up equity in their home and sells it to a relative (children, grandchildren, etc.). They use the built-up equity to “gift” some or all of the down payment and/or closing costs towards the purchase. This is a way to use equity to benefit the new homeowners, instead of giving a “discount” on the purchase price.



Benefit to Buyers:

  • Buyers can purchase a home for less than market value

  • Buyers will have immediate access to more equity

  • Buyers can keep cash reserves for home improvements, paying off other debts, etc.


Benefit to Sellers:

  • Home does not have to go ‘on the market’

  • Sellers do not have to arrange for staging or home showings.



Reference: 2022 Keller Mortgage LLC


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