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miadams06 · Joined: 30 Jul 2009 Posts: 1 1.47 Dollars($)

I'm confused....What if my brother home appraised for $175,000.00 and he's selling it for $150,000.00. How can I receive a gift of equity from him?

jveenstra · Posted: Thu Jul 30, 2009 2:24 pm Post subject: Gift of Equity

If you are getting a mortgage, the mortgage is based on the lesser of the sales price or the appraised value.

If you buy for $150,000 and get a 20% gift of equity, the mortgage would be $120,000 which is 80% of the purchase price minus the 20% gift of equity.

If the gift of equity is less than 20%, you must have 5% of the purchase price of your own saved money to put into the deal.

Anytime the gift is 20% or more, you do not need any of your own money.

Your question can better be answered if we know what amount your brother intends to receive after the gift. Knowing that, we can tell you what the purchase price needs to be.

If you buy for $175,000 with a gift of equity of 20%, your mortgage will be $140,000 and your brother would receive $140,000.

Guest

How do I figure the gift of equity on an FHA loan? The appraisal came back at $175,000 and the sales price is $150,000. Do I subtract the different from the sales price and appraised value to get the gift of equity?

Guest

The gift of equity is $25,000

Guest

We can not determine the sales price nor the gift of equity until you tell us what amount of money your relative intends to receive after the gift.

What amount of money does your relative want in his pocket/bank account after the gift??????????

angelagarfield · Joined: 25 Jul 2009 Posts: 54 0.00 Dollars($)

Lender generally consider gift of equity as down payment.

you & your brother needs to submit gift of equity letter mentioning difference amount as gift of equity.

gmakerley · Posted: Fri Jul 31, 2009 12:17 pm Post subject:

mia, in most cases that i've been privy to, the sales price would be equivalent to the appraised value, and the difference between that figure and the mortgage that you obtain would be the amount of the gift of equity. in your case, you stated a purchase price of $150,000. the maximum loan amount allowed there would be $144750, if you obtain an fha loan. you can certainly borrow less if you are able or if you wish to do so. the difference there - $5250 - is your gift of equity.

i hope this is helpful.

Guest

I'm living in my mother's home and I'm going to buy. Can I get a USDA loan using the gift of equity?

Niicss · Posted: Tue May 11, 2010 3:50 am Post subject:

You can use the gift of equity in order to pay the down payment. But you should remember that in case of a USDA loan, you do not need to pay the down payment.

Guest

Is it possible to do a gift of equity that would include not only the downpayment but also actual cash to go to repairs/renovations? For example, seller wants to pay HELC $150,000 plus have $25,000 cash. Anything over would go to buyer. If home appraises at $235,000, what can be done? Thanks!

gmakerley · Posted: Mon Aug 16, 2010 4:29 pm Post subject:

No, Beth - that would be fraud in every case.

Guest

if a bought a house from my brother,appraised at 100,000 he wants $85,000,no mortgage owed. how much of it can be used towards gift of equity?

jveenstra · Posted: Tue Jan 03, 2012 4:52 pm Post subject: Gift of Equity

If you buy it for $100,000, $15,000 can be a gift of equity.

That is not 20% down payment, so, you would need $5,000 of your own towards the down payment to do an Agneny mortgage.

If you have no money toward down payment, you would need to do an FHA mortgage.
With an FHA mortgage, you could do a $9,000 gift of equity and have your brother contribute up to $6,000 toward closing costs and prepaids. Then you would not need any of your own money for anything.

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