Family help can be a game-changer, especially when you’re close to your goal but not quite there. If your people are able and willing, here’s how to structure it right so your loan approval stays clean and everyone feels good about the plan.

You have 2 options: a Gift or a Loan. Let’s chat through them so you can decide what’s right for your situation.

Option 1: A Gift

A true gift is money with no expectation of repayment—it isn’t income and it’s not a loan. In 2025, a family member can generally gift you up to $19,000 without filing beyond the standard Form 709 rules; two spouses can “split” a gift for $38,000 to one recipient. Your family’s CPA can confirm what applies in your situation.

What your lender will ask for:

• A signed gift letter stating the amount, relationship, and that no repayment is required.
• Paper trail for the transfer (and sometimes proof of the donor’s ability).
• Funds may be wired directly to the title/closing agent to keep documentation clean.
  (Pro tip: Ask your lender for their exact gift-funds checklist—every program has nuances.)

Early-inheritance approach:
Some families gift smaller amounts over time (using the annual exclusion each year) so funds are “seasoned” in your account. Still—talk with your CPA so everyone understands the trade-offs and expectations.

Option 2: An Intra-Family Loan

Instead of gifting, family can lend you money. Done correctly, this can mean a friendlier rate than a bank—as long as the interest rate is at least the IRS’s monthly Applicable Federal Rate (AFR) and the loan is properly documented. AFRs are published monthly by the IRS.

How to do it right:

• Work with a real-estate/estate attorney to draft a promissory note, repayment terms, and (if needed) a recorded deed of trust.
• Charge no less than the AFR for the loan term to avoid imputed-interest issues with the IRS.
• Expect your mortgage lender to review documentation to confirm it’s a bona fide loan and how it affects your debt-to-income. (remember, this is another loan and will show as additional DEBT)

Which is better?

It depends on your goals, your family’s preferences, and your loan program. Gifts keep your debt lower and can help you qualify. Loans may preserve family cash flow and still save you interest vs. market rates—when structured properly.

Email me with any questions about having family members help with financing your home purchase. Many buyers have done this before (including ME!) and I can give you more guidance on family gifts and loans.

Please note: I am not a tax professional. Always confirm details with your CPA and, for loans, with an attorney. The IRS rules change, and AFRs update monthly.