The Discount Is The Down Payment.
When a family member sells you their home below market value, that difference can serve as your down payment.*
No money changes hands. It still counts.
The seller gives up equity instead of writing a check. On the right program that is a recognized source of down payment funds.
- Accepted as a source of down payment on FHA financing*
- Accepted as a source of down payment on VA financing*
- Excluded from some conventional programs*
- The sale must be between family members
- A gift letter confirming no repayment is expected
- An appraisal establishes the value the gift is measured against
Accepted as a source of down payment on FHA and VA financing*
Accepted as a source of down payment on FHA financing*
Accepted as a source of down payment on VA financing*
Not accepted on every conventional program*
The sale is between family members and priced below market value
A gift letter and an appraisal establishing market value are required
What is a Saxton Gift of Equity Purchase?
A family sale where the discount becomes the down payment
A gift of equity happens when a family member sells you their home for less than it is worth and the difference is treated as a gift toward your purchase. No money moves. The equity the seller gives up does the work a cash down payment would have done.
Two things decide this one: whether the seller is family, and which program you use. FHA and VA accept a gift of equity as down payment. Some conventional programs do not, and finding that out after the contract is signed is expensive.
Which program you use matters more here than almost anywhere else. FHA and VA both name a gift of equity as an acceptable source of down payment. It is excluded from some conventional programs entirely, so the route has to be chosen before the contract is written rather than after.*
Why choose a Saxton Gift of Equity Purchase?
Built for families selling to each other, where the price is the gift.
Parents Selling To Children
By a distance the most common version. The house stays in the family and the discount replaces a cash deposit.
No Cash Has To Move
The seller is not writing a check. They are accepting less for the property, and that difference is what counts.
Program Choice Comes First
FHA and VA accept it. Some conventional programs do not. Choose the route before the contract, not after.*
An Appraisal Sets The Number
The size of the gift is the gap between the appraised value and the agreed price, so the appraisal is what establishes it.
Paperwork Is Simple
A gift letter naming the relationship and confirming that no repayment is expected, plus a settlement statement showing the credit.
Tax Is Not Our Department
A gift of equity can have tax consequences for the seller. That is a conversation for their accountant, and it should happen early.
Hear From Homeowners Like You
Frequently Asked Questions
Straight answers about buying a home from family below market value.
A family member sells you their home for less than it is worth, and the difference between the agreed price and the appraised value is treated as a gift toward your purchase.
No, and that is the appeal. Nobody writes a check. The seller accepts less for the property and that reduction does the work a cash down payment would have done.
FHA and VA both name a gift of equity as an acceptable source of down payment. It is excluded from some conventional programs, so the route should be chosen before the contract is signed.*
By the appraisal. The gift is the gap between the appraised value and the price you agreed, which is why the appraisal matters more here than in an ordinary purchase.
A gift letter naming the family relationship and confirming no repayment is expected, and a settlement statement showing the credit. Straightforward, but it has to be right.
There can be, for the seller rather than for you. That is a question for their accountant and it is worth asking before the price is agreed rather than after.
Generally not. The relationship requirement is what makes this a gift of equity rather than an unusual sale, and lenders check it.
Find out what you qualify for
If a family member is selling you their home for less than it is worth, there is likely a Saxton route that fits. Get a fast, no obligation pre-qualification today.
Get Pre-Qualified- Consumer Financial Protection Bureau, home equity loan compared with a HELOC
- Consumer Financial Protection Bureau, mortgages
*Loan amounts, rates, terms, and down payment requirements are subject to credit approval, income and asset verification, and program eligibility. A gift of equity is accepted as a source of down payment on some programs and excluded on others, and requirements including relationship, documentation and appraisal vary. Tax treatment of a gift of equity is a matter for the seller and their tax adviser. Not all applicants will qualify. Saxton Mortgage, LLC is an Equal Housing Lender.