Is it permissible to borrow money from family for a home down payment?

Is it permissible to borrow money from family for a home down payment?

• A. Yes, but it is not advisable
• B. Yes, as long as you repay them
• C. No, it is against lending laws
• D. No, you must use personal savings only

Answer: (B)

Borrowing money from family for a home down payment is permissible as long as there is an agreement in place regarding repayment. This approach can provide the necessary funds to make a down payment, which can be especially helpful for first-time homebuyers or those who might struggle to save enough on their own. Lenders typically want to ensure that any borrowed funds are documented properly to maintain transparency and verify that the debt won't lead to financial strain for the borrower. In cases where family is willing to provide a loan, it's often advisable to have a written agreement outlining the terms, including the repayment schedule and any interest involved. This documentation helps reassure lenders that the borrower has a clear plan for repayment, thus making it an acceptable practice in many lending situations. Other choices may suggest limitations that could potentially hinder a buyer's ability to secure financing or down payment assistance.

Borrowing money from family for a home down payment is permissible as long as there is an agreement in place regarding repayment. This approach can provide the necessary funds to make a down payment, which can be especially helpful for first-time homebuyers or those who might struggle to save enough on their own.

Lenders typically want to ensure that any borrowed funds are documented properly to maintain transparency and verify that the debt won't lead to financial strain for the borrower. In cases where family is willing to provide a loan, it's often advisable to have a written agreement outlining the terms, including the repayment schedule and any interest involved. This documentation helps reassure lenders that the borrower has a clear plan for repayment, thus making it an acceptable practice in many lending situations.

Other choices may suggest limitations that could potentially hinder a buyer's ability to secure financing or down payment assistance.