Always invest
in family®

Most families begin with the same instinct: we’ll just gift the money.

Then someone pauses — a parent, a spouse, or a trusted advisor — and asks a few hard but reasonable questions:

• What happens if my child later divorces?

• Am I comfortable seeing a former son- or daughter-in-law walk away with half of the home equity created by my support?

• Is this help — or am I unintentionally sacrificing accountability?

These questions don’t reflect hesitation or lack of generosity. They reflect experience.

Intra-family mortgages give families a way to help without guessing, hoping, or relying on informal arrangements. Instead of gifting or loosely lending money, families document a real mortgage loan — with clear terms, proper security, and expectations that treat everyone fairly.

For many families, the outcome is genuinely a win-win. Borrowers gain access to homeownership or better financing while building equity responsibly. Family lenders keep their capital protected, earn a return, and avoid the unintended consequences that can come with open-ended financial support.

This page explains how intra-family mortgages work in practice, and how families replace gifting or informal lending with a structured, well-documented approach that supports both financial goals and long-term family harmony.

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.

An intra-family mortgage is a real mortgage loan, just like one from a bank — except the Lender is a family member instead of a financial institution.

That means it includes:

• Defined loan terms, including interest rate and repayment schedule

• A signed Promissory Note

• A Mortgage, Deed of Trust, or Security Deed

• A properly recorded lien against the property

• Compliance with IRS Applicable Federal Rate (AFR) requirements

When structured properly, an intra-family mortgage helps protect family relationships by setting clear expectations and treating the transaction with the same seriousness as any other mortgage.

Before engaging with National Family Mortgage ®, the most important first step is choosing the Guide that matches your situation.

Each Guide explains how intra-family mortgages work, what’s allowed, common mistakes to avoid, and whether your scenario is a good fit.

Choose the Guide that applies to you:

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, secured by the property.

Refinance out of a commercial mortgage
Replace a bank or private loan with a properly documented intra-family mortgage.

Borrow against home equity
A lump-sum family loan secured by existing home equity, often structured behind an existing first mortgage, and used to improve the Borrower’s property.

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

1. Structure the loan

Your family agrees on the loan amount, interest rate, repayment schedule, and protections for both sides. Interest rates must meet IRS requirements for the chosen term.

2. Build the loan online

Loan details are entered through National Family Mortgage’s secure online workflow. Key information is confirmed, and documents are e-delivered for review.

3. Review, sign, and close

Final documents are signed and delivered to the Borrower’s local settlement agent (attorney, title company, or escrow office, depending on the state). The loan is executed and the lien is recorded.

4. Manage payments over time

Families can manage payments privately or use optional third-party servicing to track payments, reduce friction, and simplify year-end tax reporting.

Many families choose to add loan servicing to keep the relationship focused on family — not monthly payments.

Optional family mortgage loan servicing, powered by FCI Lender Services, Inc., helps set clear expectations, protect relationships, and make year-end tax reporting simple.

Loan servicing includes:

• Monthly payment reminders and statements

• Electronic payment processing and mobile portal

• IRS Form 1098 and Form 1099-INT tax reporting

By introducing a neutral third party into the payment process, families reduce friction, improve consistency, and support clean, well-documented tax reporting over the life of the loan.

To deepen your understanding, explore these additional resources:

• Loan vs. Gift: How to Avoid Tax Issues and Family Misunderstandings

Addresses how family transfers are evaluated for tax purposes and how structure affects classification.

• IRS AFR Rules for Intra-Family Mortgages and Seller Financing

Describes how Applicable Federal Rates affect interest adequacy in family home financing.

• Why Proper Lien Recording Matters in Family Loans

Explains how recorded security affects enforcement, tax treatment, and estate administration.

• Why Forgiving an Intra-Family Loan at Death Is Usually an Estate-Planning Question, Not a Mortgage Design Question

Explains how loans are typically treated at death and why documentation clarity reduces estate and family disputes..