Prefer to talk in person? Find a mortgage specialist on Zillow
Profile picture for user76703868

Way to avoid the dreaded 10 or 20% downpayment???

I am looking to sell my house to my brother. If the appraised value of the house is $192,000 and I sell it to him for 20% less, $153,600, can he avoid having to produce a down payment?
  • February 06 2013 - Alhambra
  • 0
    0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Be a Good Neighbor. Be respectful and on-topic. No spam or self-promotion! See our Good Neighbor Policy.

Answers (6)

what you would do is sell it to him at market value and give him a gift of equity.  if you do a gift of equity for 20% then your brother does not need 5% of his own funds if buying with a conventional loan.  contact me through my profile if you have more specific questions
  • February 06 2013
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Gift of equity would work for certain credit levels.  Have your brother
contact me and I can go over the diferences???thanks
  • February 06 2013
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

What a nice brother you are ! Besides the answers here, keep in mind the new property taxes are based on the new value, the lower the better on the price - to save on taxes -  UP TO A POINT -  when its no longer considered a fair market value by the LA county assessor.
  • February 06 2013
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Be nice if it worked that way, talk to the lender he is getting the loan from for ideas.
  • February 06 2013
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Profile picture for Roseville Loan Guy
I realize it has already been said but a "Gift of Equity" would be the way to go in this case. This way you can not only avoid a large down payment, but your brother can also stay away from having to go with an FHA loan for a loan down payment, saving him TONS of money over the years...

To qualify the Loan-To-Value ratio of the loan will be determined by the lesser of the purchase price or the appraised value (I would set the purchase price at the appraised value).

If using a Realtor for the contract you will not be able to use a Realtor that is related to either one of you.

You will have to sign a gift affidavit stating that the gift is in fact a gift and will never have to be repaid. 

Generally speaking lenders want to see the gift of equity being at least 20% of the appraised value (or purchase price if less). If not your brother will have to have 5% of his own funds as part of the down payment.

That is about it. If you guys can't meet the conventional guidelines they are also allowed on FHA loans, but I would definitely try to go the conventional route first!

Hope this helps a little. Please let us know if you have any other questions.

Sincerely,
Greg Cowart

Mortgage Advisor - 16 Years Experience
Partners Mortgage

  • February 06 2013
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

If your brother qualifies he can purchase with 3.5% downpayment FHA. Convention lenders all are asking for higher downpayment. Days if 100% financing are over.
Attached:[Embedded hotlink removed by Zillow moderator. Please see our Good Neighbor Policy.]
  • February 06 2013
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.