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Georgia

Gift of equity in Georgia

How a gift of equity works when buying from family, and what each loan type's published rules say about using it.

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A gift of equity is a credit from a seller — usually a family member — that transfers part of the seller's equity to the buyer at closing. It can reduce the cash a buyer needs, and a larger equity credit lowers the loan-to-value ratio.

Whether it can be used for the down payment, closing costs, or reserves depends on the loan program's published rules. HomeStack never assumes a gift of equity can be returned to the buyer at closing or used for reserves or principal reduction.

If the sale price is simply set below the appraised value without documenting a gift of equity, lenders generally calculate LTV on the lower of price and appraised value, so the built-in equity does not by itself satisfy the down payment.

What each loan type's published rules say

Freddie Mac Home Possible
Down payment: No published rule on fileClosing costs: No published rule on file
Fannie Mae HomeReady
Down payment: Allowed per published ruleClosing costs: Allowed per published rule
Conventional (Fannie Mae standard)
Down payment: Allowed per published ruleClosing costs: Allowed per published rule
FHA-insured purchase
Down payment: ConditionalClosing costs: No published rule on file
USDA Section 502 Guaranteed
Down payment: No published rule on fileClosing costs: No published rule on file
VA-guaranteed purchase
Down payment: No published rule on fileClosing costs: No published rule on file
  • HomeReady: Gifts of equity may fund the down payment and closing costs (including prepaids) but not reserves (B3-4.3-05).
  • Conventional: Gifts of equity may fund the down payment and closing costs (including prepaids) but not reserves (B3-4.3-05).
  • FHA: Only family members may provide equity credit as a gift on property sold to other family members.
Model a family purchase in HomeStack: enter the appraised value and the gift amount under Special circumstances. Start an analysis.

Official sources

HomeStack provides research and estimates based on available program criteria. It does not provide mortgage approval, underwriting, financial advice, or a guarantee of eligibility, funding, or loan terms. Final eligibility must be confirmed by the applicable lender or program administrator.