Intrafamily Mortgages: Financing a First Home

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Parents can be the mortgage lender - often to everyone's benefit.

When parents help a child buy a first home, a structured intrafamily mortgage frequently beats both a gift and a bank loan. The child gets a competitive rate; the parents earn more than they would on cash; and the interest stays in the family rather than flowing to a lender.

The keys are the same as any family loan: a real note, a rate at or above the AFR, a recorded lien where appropriate, and consistent repayment. Handled properly, it is one of the highest-impact, lowest-friction ways a family can transfer opportunity to the next generation.