6 ways family members can help you get a mortgage
Can you borrow money to buy a house? Absolutely. Many mortgage lenders accept multiple forms of assistance to finance your purchase. For first-time buyers, this might include using gift funds for a down payment, which can reduce upfront costs. Some borrowers may also consider personal loans from family members to pay down debt or even ask a parent to cosign on the mortgage.
First-time homebuyers often rely on outside help. As many as 25 percent use gift funds from loved ones or friends as down payment assistance for a home.
How relatives can support homebuyers: 6 possibilities
Buying a house for the first time? You don’t have to go it alone. Friends and family can provide assistance in several ways:
| Support | How it works | Pros | Cons | Considerations |
|---|---|---|---|---|
| Gift funds for a down payment | Your family member gives you money as a gift for your down payment that doesn’t require repayment. |
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May have tax implications for the gift giver. | A gift that’s more than the annual gift tax exclusion of $18,000 may require the giver to file a gift tax return (Form 709). |
| Cosigning on a mortgage | Your family member agrees to be legally responsible for your mortgage payments if you can’t make them. |
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Cosigner shares the financial responsibility of a mortgage. | Cosigning can impact the cosigner’s credit score and limit how much they can borrow in the future. |
| Co-borrowing on a mortgage | Your family member becomes a joint borrower on the mortgage. |
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Both parties are responsible for paying monthly mortgage payments. | Co-borrowing is different from cosigning because both parties are equally obligated to the mortgage; read more about the differences. |
| Personal loan | Your family member gives you a loan, often with specific terms. |
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Requires legal documentation to protect both people. | It’s important to have clear loan terms and a repayment agreement to avoid misunderstandings. |
| Rent-to-own (with family as the landlord) | Your family member buys a home and rents it to you with an option to purchase at a later date. |
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Requires careful planning and a legally binding contract. | It’s important to have a written contract outlining the monthly rent, when you can purchase and what happens if you decide not to buy. |
| Temporary financial assistance | Your family member provides short-term financial support to cover added expenses during the homebuying process, like appraisal fees and closing costs. |
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Clear communication is essential to decide if repayment is expected. | Any support should be seen as a short-term solution. |
Are you finding it hard to qualify for a mortgage?
Learn more about getting a personalized homeownership plan with MyPath2Own.
Asking a family member for assistance: scripts and tips
If you’re thinking about asking a family member to help you become a homeowner—whether with financial assistance or cosigning on a loan—having a transparent conversation is key.
Here’s how to make the discussion comfortable and productive:
- Be honest: Share your goals, financial situation and how their help will make a difference.
- Explain the role: If asking for a cosigner, clarify what that is and what their responsibilities will be.
- Have a plan: Show that you’ve thought this through, including repayment plans or how you’ll manage the mortgage.
- Respect their decision: Be prepared for any response and thank them for considering.
- Get everything in writing: If they agree, formalize the terms to protect both people. You may also want to consult an attorney to draw up any paperwork.
If you need more guidance, use these sample scripts:
1. Asking for down payment assistance for a home
“I’ve been working toward buying my first home, and I’m almost there, but I need a little extra help with the down payment. Would you consider lending me $X? I’ve created a repayment plan to pay you back over [timeframe].”
2. Asking to cosign on a mortgage
“I’m looking to buy a home, but my income alone isn’t enough to qualify for a loan. Would you be open to cosigning with me? I’ll take full responsibility for the payments and can put everything in writing to make sure you’re protected.”
3. Asking for a personal loan to pay down debt
“I’ve been working hard to get my finances on track so I can buy a house for the first time, but I’m struggling to pay off debt due to high interest rates. I was wondering if you’d be willing to help me by lending or giving me $X to pay it off. I’ve also created a plan to manage my money moving forward. I know it’s a big ask, and I completely understand if you’re not in a position to help.”
4. Asking for a rent-to-own agreement
“I’ve been looking for ways to make renting more affordable while saving for homeownership. Would you consider buying a property and renting it to me with a plan for me to purchase it later? I’d pay rent on time and treat it like my own home. It could be a good investment for you, and it would help me build stability.”
5. Expressing gratitude (regardless of the answer)
“I really appreciate your support, even if you can’t help financially. Your guidance and encouragement mean a lot to me.”
We’ve got options for first-time homebuyers
Ready to become a homeowner? Learn more about our first-time-buyer-friendly loan programs, like 3-2-1 Home Plus, 1% Down Payment Advantage and MyPath2Own. Then reach out to your local Guild loan officer to see which program you may qualify for.
The above information is for educational purposes only. All information, loan programs and interest rates are subject to change without notice. All loans subject to underwriter approval. Terms and conditions apply. Always consult an accountant or tax advisor for full eligibility requirements on tax deduction.