If you’re buying a home from a family member, one of the smartest and most overlooked strategies is using a gift of equity. This allows the seller—typically a parent or close relative—to give you part of their home’s equity to cover your down payment. It’s a powerful tool that can help you get into a home with little or no out-of-pocket costs.

What Is a Gift of Equity?

A gift of equity happens when the seller sells you the property for less than its current market value, and the difference is applied toward your down payment. For example:

  • Appraised value: $300,000
  • Agreed purchase price: $250,000
  • Gift of equity: $50,000

That $50,000 counts toward your down payment, helping you meet loan requirements without needing to bring cash to the table.

FHA Loans Work Well with a Gift of Equity

When using a gift of equity in a family transaction, FHA loans are one of the best loan types to consider. Here’s why:

  • FHA allows a gift of equity from family members
  • No cash has to exchange hands—just equity
  • Sellers can also pay all closing costs and prepaid items
  • FHA’s low down payment requirement is satisfied through the gift

With enough equity in the home, you could end up buying with very little out-of-pocket expenses.

Key Requirements for a Gift of Equity Transaction

At North Star Mortgage Network, we help you get everything in order. Here’s what’s typically needed to move forward with a gift of equity:

  • A family relationship with the seller (parent, grandparent, child, sibling, etc.)
  • A professional appraisal to establish market value
  • A signed gift letter from the seller
  • Standard loan requirements such as income and credit

Why Choose North Star Mortgage?

Not every lender understands how to structure a gift of equity transaction the right way. We’ve guided many Florida families through this process, offering flexible solutions, fast approvals, and personal service every step of the way.

We take pride in making these transactions smooth, especially when it’s about helping family help family.

Let’s Talk About Your Gift of Equity Options

If you’re planning to buy a home from a relative—or want to sell your home to a loved one—reach out to see how a gift of equity can work for you. We’ll confirm eligibility, structure the loan properly, and walk you through every step.

Call or text Nathan Young at 904-613-7700
Or start your pre-approval now: Apply Here

North Star Mortgage Network, Inc.
Your best interest is my principal concern.

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