Mortgage Glossary
Gift of Equity
Defined by Onias Derilus, Mortgage Capital · NMLS# 1859012 · Florida licensed mortgage broker
A gift of equity occurs when a seller, usually a family member, sells a home below market value and counts the difference as the buyer's down payment.
What Gift of Equity means
The equity gift can satisfy some or all of the down payment without cash changing hands. It requires a gift letter and an appraisal establishing market value. Lenders allow it mostly on family transactions.
Florida example
Parents sold their Orlando home to their daughter for $250,000 though it appraised at $300,000, and the $50,000 gift of equity covered her entire down payment.
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