Gift of Equity

When someone sells a property to a family member or close acquaintance for less than the current market worth, this is a gift of equity. The difference in pricing indicates the contribution of equity. In most cases, the gift of equity serves as the homebuyer's down payment. It makes it easier for them to obtain a mortgage by increasing the value of their home. When family members sell their homes, a gift of equity is frequently employed. For example, while selling the family house to their child, parents may give equity.