They Bought Their Parents’ House With $0 Out of Pocket

Can you buy your parents’ house using their existing equity toward your down payment? In the right situation, a gift of equity can make buying a home from family much more manageable. In this video, Amy DeBusk, Certified Mortgage Planner, shares a real client story involving multigenerational living, an FHA loan, and a gift of equity. The family’s journey started years ago. After several moves, the parents eventually built a custom home next door while their children continued living in the parents’ previous home in Penryn, California. The final piece of the plan was for the children to officially purchase that home from their parents. Amy explains how they structured the purchase using an FHA loan and gift of equity. Part of the parents’ equity was applied toward the buyers’ 3.5% FHA down payment. In this particular transaction, they also used seller credits toward closing costs and a temporary 2 year buydown. According to the scenario Amy discusses, the first year rate was reduced to 4.625%, resulting in approximately $900 per month in initial payment savings. The result was a creative financing strategy that allowed this family to complete their multigenerational housing plan while living right next door to one another. If you’re considering buying a home from your parents or another family member, Amy can help you understand how a gift of equity may work for your situation. Book a free 30 minute discovery call at talkingwithamy.com Loan programs, rates, credits, eligibility requirements, and terms are subject to qualification and may vary. The figures discussed in this video relate to a specific client scenario and are not a guarantee of terms or savings. Timestamps 00:00 Creative ways families are becoming homeowners 00:25 Multigenerational family home loans 00:30 A family’s unique homebuying story 00:43 How the family’s plan started 00:59 Buying a 100 year old home in Loomis 01:18 Moving into a duplex 01:24 How the pandemic changed their plans 01:45 The family swaps homes 02:20 Parents move into their new custom home 02:26 Buying the Penryn home from their parents 02:35 Using an FHA loan 02:41 What is a gift of equity? 02:55 How a gift of equity works 04:00 How they purchased with no money out of pocket 04:16 The benefits of living next door to family 04:43 Buying your parents’ home 04:57 Book a free 30 minute discovery call