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Most families begin in the same place: they want to help.

Then the practical questions begin:

• Should this be a loan or a gift?
• Are we helping or unintentionally sacrificing accountability?
• What happens if family circumstances change later, like a divorce?
• Is this fair for all family members?
• How do we keep expectations clear from the beginning?
• How do we document the transaction the right way?

An intra-family mortgage gives families a way to help while treating the arrangement with the seriousness of a real mortgage.

Instead of relying on a handshake, an informal transfer of funds, or loosely defined repayment expectations, families document a real loan with clear terms, proper security, and a structure designed to support long-term clarity.

For many families, that creates a genuine win-win: the borrower gains access to home financing on terms the family is comfortable with, and the family lender preserves structure, accountability, and protection.

If parents purchase first and then intend to finance to a child later, see When Mom and Dad Buy the House in Their Own Names.

Before moving forward, the first step is reviewing the Guide that matches your situation.

Each Guide explains how the transaction works, what limitations apply, common dealbreakers, and what families should understand before getting started.

Choose the Guide that fits your situation:

Buy a home with family financing
A family member provides mortgage financing so a buyer can purchase a home with clear terms and a properly recorded lien.

Buy a relative’s home (Seller Financing)
The seller transfers ownership now and receives payments over time under a documented, property-secured note.

Refinance out of a commercial mortgage
A family member replaces an existing bank or private mortgage with a properly documented intra-family loan.

Borrow against home equity
A family member provides a lump-sum loan secured by existing home equity, often structured behind an existing first mortgage.

While families use intra-family mortgages in different ways, the process generally follows the same structure.

1. Structure the Loan

The family agrees on the core loan terms, including:

• loan amount

• interest rate

• repayment schedule

• loan type and term

• protections for both lender and borrower

Where applicable, the interest rate should meet or exceed the IRS Applicable Federal Rate (AFR) in effect for the loan term when the transaction is finalized.

2. Build the Loan Online

Once the basic terms are settled, the family enters the transaction details through National Family Mortgage’s online workflow.

This step is used to organize the information needed for the loan documents, confirm the details of the property and parties, and prepare the transaction for document generation and review.

3. Review, Sign, and Prepare for Closing

Final documents are delivered electronically for review and e-signature.

Depending on the transaction, the documentation may include:

• a Promissory Note

• a Mortgage, Deed of Trust, or Security Deed

• related closing and recording documents appropriate to the transaction

Families should review the final documents carefully and make sure all information is accurate before execution.

4. Close, Record, and Manage Payments

Once signed, the final loan documents are used at the borrower’s closing through the family’s local settlement agent, such as a closing attorney, title company, or escrow company, depending on the state.

The settlement agent handles the real-estate closing mechanics, including:

• receiving and disbursing funds

• recording the lien

• collecting any applicable recording fees or taxes

• coordinating the final closing process

After closing, the family may manage payments privately or use optional third-party loan servicing.

Many families choose optional loan servicing to keep the relationship focused on family rather than monthly payment administration.

Optional family mortgage loan servicing, powered by FCI Lender Services, Inc., helps support:

• monthly payment reminders and statements

• electronic payment processing

• full loan accounting

• annual IRS reporting support, including Form 1098 and Form 1099-INT

• payoff statements and lien release support where applicable

Using a neutral third party can help reduce friction, preserve clean records, and make long-term loan administration easier for both borrower and lender.

A documented intra-family mortgage does more than create paperwork.

It helps families:

• replace uncertainty with clear terms

• align expectations before money changes hands

• protect the lender’s interest with recorded security

• support tax reporting and repayment discipline

• keep the transaction business-like without making it impersonal

That structure often becomes most valuable later, when a refinance, sale, estate issue, or unexpected life event makes clear documentation especially important.

To explore how these transactions work in more specialized situations, you may also find these articles helpful:

Loan vs. Gift: How to Avoid Tax Issues and Family Misunderstandings
How families reduce classification risk and avoid confusion about whether money was intended as a loan or a gift.

IRS AFR Compliance for Intra-Family Loans and Seller-Financed Home Sales
How Applicable Federal Rates affect interest adequacy in family home financing.

Why Proper Lien Recording Matters in Family Loans
Why recorded security affects enforcement, tax treatment, and long-term clarity.

Why Forgiving an Intra-Family Loan at Death Is Usually an Estate-Planning Question, Not a Mortgage Design Question
Why loan forgiveness at death is generally handled through estate planning, not built into the mortgage itself.

Once you understand how the process works, the next step is reviewing Products & Pricing to see the loan structures, setup costs, and optional servicing choices available for your situation.