When loved ones contribute funds for a home purchase, lenders require clear documentation to confirm that the money is a gift, not a loan.

This is where a mortgage gift letter comes in.

A mortgage gift letter is a simple but essential document that assures lenders the funds you received are a gift, with no repayment expected.

In this guide, we¡¯ll cover everything you need to know about mortgage gift letters, including how to write a gift letter and the cash gift requirements based on loan type.

What Is a Mortgage Gift Letter?

A mortgage gift letter is a signed document from a donor, certifying that the down payment gift funds are provided with no expectation of repayment.

Gifts from friends and family are common ways to help cover home-buying expenses like the down payment and closing costs. Mortgage lenders need assurance that these gifts are not loans, as additional debt could impact mortgage approval.

The mortgage gift letter serves as a straightforward way to confirm that gift funds are not required to be repaid.

How Do You Write a Gift Letter for a Mortgage?

A mortgage gift letter must contain certain details, including the donor¡¯s name and contact information, the gift amount, and specifics about the property being purchased. The letter is written and signed by the donor, though many mortgage lenders provide templates to make the process easier.

A mortgage gift letter typically includes the following information:

• Donor¡¯s name and contact details
• Address of the property being purchased
• The relationship between the donor and the buyer
• The gift amount
• The date of the gift transfer
• A statement confirming that the donor does not expect repayment
• Details of the donor¡¯s bank, account number, and account type
• The donor¡¯s signature

Once the mortgage gift letter is complete, the homebuyer can submit the letter to their mortgage lender as part of the loan documentation process. There is no need for notarization.

Mortgage Gift Letter Template

If a mortgage lender does not provide a template for a mortgage gift letter, it is easy to create one by customizing the example below:

When planning a home-buying timeline, ask gifters to provide a mortgage gift letter after the offer is accepted and before closing on the home.

Once the letter is signed by both the donor and the homebuyer, it can be submitted to the mortgage lender as documentation.

Mortgage Gifts by Loan Type

Mortgage gift rules vary depending on the type of loan being used to purchase the home. For single-family homes, gift funds can be used for a down payment, but the relationship between the donor and the buyer matters.

Conventional Loans and Mortgage Gifts

Conventional loans are commonly used by first-time buyers, and gift donors must be related to the homebuyer.

Family members eligible to give mortgage gifts include:

• A spouse
• Children or dependents
• Blood relatives
• Relatives by marriage, adoption, or legal guardianship
• A domestic partner or fianc¨¦/fianc¨¦e

Friends and other parties who are not related to the buyer cannot donate gift funds for conventional loans.

FHA Loans and Mortgage Gifts

With FHA loans, donors are not limited to family members. Those eligible to give mortgage gifts include:

• Immediate family
• Close friends
• Employers
• Labor unions
• Charity organizations

Extended family members, such as cousins, nieces, and nephews, cannot contribute to .

USDA and VA Loans and Mortgage Gifts

USDA loans and VA loans are the most flexible regarding gift funds. These loans do not restrict gift donors based on their relationship to the homebuyer.

However, those involved in the sale of the property, such as the seller, real estate agents, and the lender, are prohibited from contributing to the gift funds.

Both USDA and VA loans offer 100 percent financing, allowing homebuyers to use gift funds to cover closing costs rather than a down payment.

Mortgage Gift Requirements by Property Type

Most first-time buyers can use gift money to cover their entire down payment when purchasing a single-family home. However, certain property types have specific rules for buyer contributions:

• Single-family Homes: Gift funds may cover 100% of the down payment, with no personal contributions required.
• Multi-family Homes: Buyers must contribute at least 5% of their own funds toward the down payment if purchasing with less than 20% down.
• Investment Properties: Gift funds cannot be used for investment property down payments.

When buying a first home, saving thousands for a down payment may not be necessary with mortgage gift funds or down payment assistance.

Mortgage Gift Letter FAQs

Still have questions? Here are some common concerns about mortgage gift letters.

Do Buyers Pay Taxes on Mortgage Gifts?

Homebuyers do not pay taxes on mortgage gifts, nor do they need to report the gift money to the IRS.

If a donor gives more than $18,000 in 2025, they are responsible for to the IRS. It¡¯s recommended to contact a tax advisor for more information.

What Is the Maximum Gift Amount for a Mortgage?

There is no maximum limit on the amount of gift money that can be received for a mortgage down payment. Donors are free to contribute any amount, and the funds can also be applied toward closing costs.

Donation limits imposed by the IRS only affect when a donor must report the gift, not how much can be contributed to the mortgage down payment.

Does a Mortgage Gift Letter Need To Be Notarized?

No, notarization is not required for a mortgage gift letter. The letter should include key details about the donor, the buyer, and the gift amount, including:

• Donor¡¯s name, address, and relationship to the buyer
• Buyer¡¯s name
• Address of the property being purchased
• The gift amount, transfer date, and banking details
• A statement certifying no repayment is expected
• Signatures of the donor and buyer

The mortgage lender can verify the gift through the buyer¡¯s bank statements.

A Longer Definition: Escrow

Escrow is a financial arrangement between a mortgage lender and a homeowner where:

1. The homeowner pays one month of their annual real estate tax bill and homeowners insurance premium in their monthly PITI to their lender.
2. The lender pays the homeowner’s taxing authority and insurance company as the bills come due.

Some mortgage types, like FHA mortgages and USDA mortgages, require buyers to set up an escrow account as part of the loan approval, with few exceptions.

Escrow is often required for conventional mortgages with low down payments. However, some lenders may also require escrow for larger down payments. If a buyer is given the option to waive escrow and chooses to do so, the lender may raise the interest rate or charge extra fees to offset their added risk.

Escrow accounts are established at closing. In some parts of the country, they are known as impound accounts.

A home buyer’s escrow contribution changes annually as their tax and insurance bills change. Starting escrow balances and estimated payments are based on prior year expenses, with a two-month cushion added in to ensure the account has sufficient funds to cover increases in costs.

Mortgage companies review escrow accounts annually for accuracy and over-collection. When a lender determines it over-withheld money from a home buyer, it is required to issue an escrow refund.

Conversely, buyers must make up a difference if there is a shortfall. Escrow true-ups can be handled via a one-time payment or by adjusting a mortgage payment upward to cover the escrow account deficiency.

Escrow: A Real World Example

Consider a first-time home buyer who has just closed on a house. As part of their mortgage agreement, their lender sets up an escrow account to handle property taxes and homeowners insurance.

As part of their monthly mortgage payment, the homeowner pays a portion of their estimated annual taxes and insurance premiums which go into escrow. Then, when the tax and insurance bills come due, the lender uses the money in escrow to pay the homeowner’s bills.

The escrow arrangement is helpful for the homeowner because it splits up two large annual bills into 12 smaller payments and offers a convenient and worry-free way to pay them. For the lender, escrow is a guarantee that the home’s tax bill will stay current and its insurance policy will not lapse.

Common Questions »·ÇòÓéÀÖ Escrow

Why did my mortgage payment go up?

When a homeowner’s mortgage payment goes up, and they do not have an adjustable-rate mortgage, the likely cause is escrow. When a homeowner’s escrow withholdings are too small to cover next year’s projected bills, the monthly PITI is raised to pay for the projected shortfall.

How much is escrow each month?

A homeowner’s escrow payment is one-twelfth of the estimated annual cost for property taxes and homeowner’s insurance on a property. For example, if your home’s taxes and insurance are $1,200 per year combined, your monthly escrow payment is $100.

What happens if there’s not enough money in my escrow account when my bills come due?

If your escrow account has a shortage when the bills come due, your lender will usually cover the shortfall on your behalf. Then, the lender will require you to make up the difference by either a lump sum payment or adjusting your future monthly escrow payments.

What happens if there’s too much money in my escrow account?

Mortgage lenders conduct annual reviews of escrow accounts. When an escrow account is over-funded, the lender refunds the excess escrow immediately.

Do escrow payments change over time?

Yes, escrow payments change over time. Each year, lenders conduct escrow analyses based on prior-year tax bills and insurance premiums. When a homeowner’s monthly escrow payment is too large or too small, the lender notifies the homeowner and makes adjustments in upcoming payments.

Is it possible to cancel an escrow account?

Sometimes, homeowners can cancel their escrow account if they have enough equity in their home, though this varies by mortgage lender and loan type. Canceling escrow means the homeowner is responsible for paying property taxes and insurance premiums directly.

What happens to my escrow account when I pay off my home?

When a home is owned free-and-clear, there is no mortgage company to manage an escrow account. Homeowners without a mortgage are responsible for paying property taxes and insurance premiums directly.

Are escrow accounts good?

Many homeowners like using an escrow account because it simplifies budgeting for property taxes and insurance premiums and protects against tax liens or lapses in insurance coverage. Lenders like escrow accounts for the same reasons.

A Longer Definition: Mortgage Rate Lock

A mortgage rate lock is a price agreement between a mortgage lender and a home buyer with three parts: a mortgage rate, a cost, and a time frame.

1. The mortgage rate is the interest rate for the buyer’s mortgage.
2. The cost is the number of discount points the buyer will pay at closing.
3. The time frame is how many days the agreement is valid.

When a home buyer asks for a rate lock, it signals their commitment to the mortgage lender and their approval to proceed with mortgage underwriting. The rate lock guarantees the mortgage terms for a specific number of days, unless there are material changes in the application related to credit score, employment, or address.

Until a mortgage is rate-locked, its interest rate is subject to change. Once locked, the rate lock is honored, regardless of market fluctuations or current mortgage rates.

Home buyers can request mortgage rate locks in 15-day increments.

The typical quoted rates, like those shown on the Homebuyer.com mortgage rates page, assume 30-day mortgage rate locks. Longer locks may increase rates.

Here is how the number of days in a mortgage rate lock can affect cost. This chart is based on sample mortgage pricing. Today’s mortgage rates may be different from the chart below.

The Cost of Mortgage Rate Lock Lengths

Home buyers may also have the option to select mortgage rate locks longer than 90 days, though costs could vary based on lender policies.

When deciding on a rate lock length, it’s important to choose a time frame that covers the expected period until your closing date. While rate locks can sometimes be extended for a fee, the cost of extending may vary and could become significant depending on the circumstances.

Mortgage Rate Lock: A Real World Example

Imagine a first-time home buyer who gets their offer for a home accepted. Their buyer’s agent smartly negotiates for a closing date in 30 days, allowing the buyer to secure a 30-day mortgage rate lock from the lender.

In the following weeks, the market for mortgage-backed securities deteriorates, causing a sudden and sharp increase in U.S. mortgage rates. Since the buyer’s rate was locked, they are shielded from the increase.

At closing, the buyer feels fortunate for securing a rate below current market rates and for choosing a 30-day rate lock, which was less expensive than a 45-day lock. Their timing and strategy worked out well.

Common Questions »·ÇòÓéÀÖ Mortgage Rate Lock

What happens if mortgage rates drop after I lock in my rate?

If interest rates decrease after locking in a rate, home buyers generally cannot take advantage of lower rates unless their rate lock agreement includes a “float-down” option, which usually comes with additional costs.

Can I extend a mortgage rate lock if my home purchase is delayed?

Yes, many lenders offer the option to extend a rate lock, but there may be an additional fee. It’s important to discuss extension policies with the lender in advance.

Is there a fee for locking in a mortgage rate?

Some lenders charge a fee for a rate lock, while others offer it at no cost. The fee, if charged, usually depends on the length of the lock period.

How long can I lock in a mortgage rate?

The typical lock period ranges up to 60 days, but longer periods may be available. Keep in mind that longer rate locks can be more expensive.

Does a rate lock guarantee my mortgage application will be approved?

No, a rate lock only secures the interest rate. The approval of the mortgage application depends on factors such as credit score, income verification, and the property appraisal.

What are the risks of not locking my mortgage rate?

Without a mortgage rate lock, home buyers are exposed to potential interest rate increases before closing. Higher rates can result in higher monthly payments and could affect mortgage approval.

How does a lender determine the locked-in rate?

The locked-in rate is typically based on current market rates at the time of the lock, along with factors in the mortgage application such as credit score, loan amount, and down payment.

Can a mortgage rate lock be canceled?

Yes, a mortgage rate lock can usually be canceled. However, canceling may involve fees, especially if the home buyer switches lenders after locking in a rate. Canceling the rate lock also means the buyer is subject to current market rates, which could be higher.

If I lock in a rate with one lender, can I switch to another lender?

A home buyer can switch lenders after locking in a rate, but the locked-in rate with the initial lender will be lost. Starting with a new lender means being subject to their rates and terms, which could be different from the original agreement.

A Longer Definition: Due on Sale Clause

The due on sale clause, also known as an acceleration clause, is a common provision in mortgage agreements, especially in conventional mortgages backed by Fannie Mae or Freddie Mac, and jumbo mortgages from private banks.

Due on sale stipulates that when a property securing the mortgage is sold or transferred, its remaining principal balance becomes immediately due and payable. Without this clause, a homeowner could sell the property and use the proceeds for something other than paying the mortgage and releasing the lien.

The due on sale clause is also relevant when a homeowner is underwater, selling the home, and the sale price is lower than the loan balance. Because of the due on sale clause, the must bring extra cash to closing to satisfy the lien or ask the lender for permission to complete a short sale.

The due on sale clause is the opposite of the assumption clause, which allows homeowners to transfer their mortgage to the subsequent owner of the home.

Due on Sale Clause: A Real World Example

Imagine a first-time home buyer using the HomeReady 30-year fixed-rate mortgage, which allows for a 3 percent downpayment. Because HomeReady is a conventional mortgage, it includes the standard due on sale clause, which requires the remaining balance on the loan to be paid immediately when the home is sold.

After living in the home for four years, the first-time buyer sells it, triggering the mortgage’s due on sale clause. Because the sale price is higher than the loan balance, the buyer pays off the mortgage and keeps the difference, which is used as a downpayment for the next home.

If the sale price had been lower than the loan balance, the buyer would have had to bring the cash difference to closing to pay off the mortgage or ask the lender to approve a short sale instead.

Common Questions »·ÇòÓéÀÖ Due on Sale

What happens if I sell my home and my mortgage has a due on sale clause?

If your mortgage has a due on sale clause and you sell your home, the sale proceeds must be used to pay off the remaining mortgage balance.

Does a due on sale clause affect refinancing?

The due on sale clause does not typically impact refinancing. Refinancing means paying off the current mortgage with a new one, which is a separate process from selling the home.

What if I inherit a property with a mortgage?

Inheriting a property with a mortgage can be complex. The due on sale clause might apply, but exceptions exist, particularly for inherited properties. Contact the mortgage servicer to understand your options and responsibilities.

Can an assumption clause override a due on sale clause?

No, an assumption clause cannot override a due on sale clause. If the mortgage includes a due on sale clause, the loan must be paid off upon selling, preventing the new buyer from assuming the mortgage.

How common is a due on sale clause in mortgages?

The due on sale clause is very common in mortgages, particularly in conventional home loans, as it protects lenders from risks associated with loan assumptions.

What are my options if I can’t pay off the mortgage after selling?

If you cannot pay off the mortgage after selling, you might negotiate a short sale with your lender or explore other financial options to cover the shortfall.

Does a due on sale clause apply to family transfers?

In some cases, family transfers can trigger a due on sale clause. However, there may be exceptions or special considerations. Review the specific mortgage terms and contact the mortgage servicer to understand your options.

A Longer Definition: Discount Points

Discount points, often called “points,” are a form of prepaid interest that borrowers can pay to reduce their mortgage’s interest rate. One discount point costs 1 percent of the mortgage amount.

Historically, a home buyer can pay one discount point to lower their mortgage rate by 25 basis points. The precise discount varies based on prevailing mortgage market conditions. Buyers may purchase multiple discount points and receive larger mortgage rate discounts.

Paying for discount points is an upfront payment in exchange for a reduced mortgage rate over the life of the loan. Home buyers should calculate whether the upfront cost of buying points is outweighed by their long-term interest savings, which depends on the reduction in interest rate and the length of time the borrower plans to hold the mortgage.

There are five general scenarios when it makes sense for buyers to pay discount points on their mortgage.

The mortgage qualification reason to pay points

For home buyers who don’t qualify for a mortgage at today’s mortgage rates because their debt-to-income (DTI) is too high, paying discount points is a good strategy for getting access to lower mortgage rates, which, in turn, lowers the DTI.

Home buyers can reduce their debt-to-income ratio by paying mortgage discount points.

The budget reason to pay points

For home buyers prioritizing a lower monthly mortgage payment and with sufficient cash reserves, paying for discount points can be a strategic financial decision. By buying discount points, these buyers can secure a lower interest rate on their mortgage, which yields smaller monthly payments.

Paying for points is especially appealing for home buyers who budgeted carefully for their home purchase and have excess cash beyond their down payment and closing costs.

The long-term residency reason to pay points

For home buyers who plan to stay in their current home and will not refinance for at least five years, purchasing discount points can be a long-term money-saver. Their long-term commitment to the home and its original mortgage allows ample time for the monthly savings to surpass the upfront expense.

This strategy is especially helpful for home buyers with a forgivable mortgage.

The purchase sales contract reason to pay points

For home buyers receiving seller concessions from the seller, using cash to buy discount points is a savvy way to lower the mortgage rate and make the home less expensive. Reducing the mortgage rate does more to affect home affordability than reducing the sales prices.

Ask your buyer’s agent to add seller concessions to your purchase contract.

The mortgage market reason to pay points

During periods of market instability, home buyers may find that every mortgage loan requires discount points. When this happens, buyers should plan to pay discount points as part of their purchase or negotiate for seller concessions.

Discount Points: A Real World Example

Imagine a first-time home buyer who negotiates a purchase contract with 3 percent in seller concessions. Then, as the buyer is making their mortgage rate lock, they find that their seller concessions exceed their total closing costs.

Seeing an opportunity to maximize seller contributions, the buyer uses the leftover concessions to purchase mortgage discount points and get a lower mortgage rate. The reduction decreases their monthly mortgage payment, lowers their debt-to-income ratio, and creates significant interest savings over the 30-year life of the loan.

Common Questions »·ÇòÓéÀÖ Discount Points

What is the cost of one discount point?

One discount point typically costs 1 percent of the total mortgage amount, or $1,000 for every $100,000 borrowed or portion thereof.

How much does a discount point lower the interest rate?

The effect of discount points on mortgage rates varies but, generally, the first discount point lowers the interest rate around 0.25 percentage points.

Are discount points tax-deductible?

Yes, discount points are , but it’s advisable to consult with a tax professional for specific guidance.

How do origination points differ from discount points?

Origination and discount points are fees paid at closing but serve different purposes. Origination points are a service fee that pays for the lender’s services. Discount points are prepaid interest costs that lower a loan’s interest rate.

What are the benefits of using seller concessions for discount points?

Using seller concessions for discount points can lead to a lower interest rate, reduced monthly mortgage payments, and significant long-term savings on interest. It’s a strategic way to make the most of seller contributions in a real estate transaction.

How do discount points impact a mortgage loan over time?

Over the life of a mortgage loan, discount points can significantly reduce the total amount of interest paid. This impact becomes more pronounced over a longer 30-year loan term, making it a cost-effective strategy for long-term homeowners.

Does purchasing discount points improve my debt-to-income ratio?

Yes, purchasing discount points improves your debt-to-income ratio by lowering your monthly mortgage payments. This can be beneficial for meeting mortgage guideline requirements and improving your overall financial health.

Are there specific situations where buying discount points is highly recommended?

Buying discount points is often recommended for buyers who have excess funds after covering their down payment and closing costs, plan to stay in their home for a long period, and want to reduce their long-term interest expenses.

When are discount points not worth it?

Discount points may not be worth the investment when you plan to move or refinance in the short term, as the upfront cost might not be recouped through interest savings.

The Differences Between Fannie Mae HomeReady and Freddie Mac Home Possible Mortgages

Fannie Mae HomeReady and Freddie Mac Home Possible mortgages cater to a similar market segment, and both are popular among first-time home buyers. However, distinct features and requirements set them apart.

Highlights: Fannie Mae HomeReady Mortgage

The HomeReady mortgage by Fannie Mae is tailored for low- to moderate-income borrowers. It stands out for low mortgage rates and reduced private mortgage insurance requirements.

Key features of the HomeReady mortgage include:

• A minimum down payment of 3 percent
• Income limits set at 80% of the area median income
• 620 minimum credit score
• Accepts co-borrower incomes, even if the co-borrower doesn’t live in the home
• Available for various property types, including single-family homes, condos, and townhouses

Highlights: Freddie Mac Home Possible Mortgage

The Freddie Mac Home Possible mortgage offers affordable homeownership opportunities to a broad spectrum of borrowers, including first-time home buyers with lower credit scores.

Notable features of the Home Possible mortgage include:

• A minimum down payment of 3 percent
• Income limits at 80% of the area median income
• 660 minimum credit score
• Mandatory homeownership education for first-time home buyers
• Available for single-family homes, condos, and multi-unit properties

Both mortgages are affordable programs, catering to slightly different home buyer profiles.

Mortgages At-A-Glance

Compare Mortgage Statistics

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Compare Occupancy Rules

Compare Citizenship Rules

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Compare Property Rules

Compare Ownership Rules

Compare Income Rules

Compare Assets & Downpayment Rules

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Important Notice For Home Buyers

This mortgage comparison information is based on published Federal Housing Finance Agency mortgage guidelines. 

Mortgage guidelines for the HomeReady and Home Possible mortgage programs are subject to change without notice. Additionally, individual mortgage lenders may have their own variation of these guidelines, called lender overlays, which could affect your mortgage approval process. 

If a mortgage lender denies your HomeReady or Home Possible mortgage application, it does not necessarily mean all mortgage lenders will deny it. Different mortgage companies enforce different standards, and getting approved with another lender may be possible. 

Find Out More: HomeReady vs Home Possible Mortgages

Eager to learn more and make an informed decision? Dive into the details by visiting our comprehensive Fannie Mae HomeReady and Freddie Mac Home Possible guides. And when you¡¯re ready to move forward, start your mortgage pre-approval at Homebuyer.com. 

The Differences Between Conventional and VA Mortgages

Choosing the right mortgage is crucial for home buyers. The two common mortgage types for many buyers, Conventional and VA (Veterans Affairs) mortgages, have several similarities and differences.

When purchasing a first home, it is important to finance it with the optimal mortgage for your finances and future. Two popular mortgage options for first-time buyers are Conventional mortgages and VA mortgages. While they share several traits, they also have key differences.

Highlights: Conventional Mortgage

Conventional mortgages are backed by Fannie Mae or Freddie Mac under the Federal Housing Finance Agency (FHFA). They come in two varieties: conforming and non-conforming. Conforming mortgages are conventional loans falling within the FHFA’s mortgage loan limits, whereas non-conforming mortgages, often termed jumbo loans, exceed these limits.

Conventional mortgages offer fixed-rate options such as 30-year, 20-year, and 15-year terms, as well as adjustable-rate mortgage options.

Qualification criteria for conventional mortgages typically include:

• A down payment of at least 3 percent
• A verified source of income
• A minimum credit score of 620
• Loan amounts within local mortgage limits
• Structurally sound and habitable homes

Highlights: VA Mortgage

VA loans, guaranteed by the Department of Veterans Affairs, are available exclusively to active duty military, veterans, and eligible surviving spouses. VA loans offer benefits such as no down payment and no private mortgage insurance, which help with homeownership. However, VA loans do require a Funding Fee, which can be paid upfront or financed into the loan.

VA mortgages are available as 30-year and 15-year fixed-rate loans, or as adjustable-rate mortgages. VA loans do not have specific loan limits.

Key VA loan features include:

• No down payment required in most cases
• No private mortgage insurance (PMI) required
• More lenient credit requirements compared to conventional loans
• Eligibility for primary residences only, not for investment properties
• Assumability clause for future home buyers

VA mortgages generally offer more favorable loan terms than conventional loans, especially for those with limited down payment funds or lower credit scores.

Mortgages At-A-Glance

Compare Mortgage Statistics

Compare Mortgage Products

Compare Mortgage Insurance

Compare Occupancy Rules

Compare Citizenship Rules

Compare Credit Rules

Compare Property Rules

Compare Ownership Rules

Compare Income Rules

Compare Assets & Downpayment Rules

Compare Loan Traits

Important Notice For Home Buyers

This comparison between conventional and VA mortgages is based on official mortgage guidelines from the FHFA and VA. These guidelines are subject to change if mortgage guidelines are updated.

Additionally, individual mortgage lenders may apply variations of these guidelines, called lender overlays, which can affect mortgage approvals.

If one lender denies your conventional or VA mortgage application, it does not mean all lenders will do the same. Different mortgage companies have different eligibility criteria, so it may still be possible to get approved with another lender.

It is recommended to consult with multiple lenders to explore your mortgage options.

Find Out More: Conventional vs VA Mortgages

Want to make an informed decision? Explore more by visiting our comprehensive Conventional Mortgage and VA Mortgages guides. When you’re ready to move forward, begin your mortgage pre-approval at Homebuyer.com.

Owning a home isn’t just about having a place to live¡ªit also offers ways to earn extra income.

Whether it’s renting out space, starting a home-based business, or generating passive income, a new home can provide revenue to cover expenses and support financial goals.

With a bit of creativity, a home can become an asset that works for its owner.

Here are 10 ways to make money with your new house.

1. Get a Roommate

For generations, roommates have been a common way to save on rent. Roommates are just as beneficial when you own a home. They can help cover mortgage costs, split utility expenses, and assist with household chores, which saves time and money.

However, living with roommates isn¡¯t always easy. To avoid complications, set clear guidelines and have them sign a lease to protect your long-term investment.

2. Rent Out Your Yard

Big yards, backyard pools, and guest houses can help pay bills. Homeowners can advertise and rent out amenities at hourly or nightly rates.

Apps like Sniffspot allow you to rent your yard to pet owners, while lets you rent your pool by the hour. These ventures might not cover the entire mortgage but can help with maintenance and other expenses.

3. Grow a Garden

Gardens can provide fresh fruits and vegetables that are simple to grow in most climates. Homeowners can sell extra produce or preserved goods like jams or pickles.

Flower gardens can also produce blooms and seeds to sell. For those with larger gardens, consider renting them for photography or small events. Dried flowers can be sold for crafts, making the most of the garden¡¯s beauty.

4. Create and Sell Products

A new home may be the perfect place to launch a small business. Running a business from home can offer convenience and potential tax deductions for a home office.

Here are a few popular home business ideas:

• Home baking business
• Pet treats and accessories
• Jewelry art
• Woodworking and furniture refurbishing

Some home businesses require certifications, licensing, or permits. Be sure to check with the local government to meet any necessary requirements.

5. Offer Extra Space for Storage

Homes with extra space in a garage or shed can rent that space as storage. Storage units cost an average of , and climate-controlled units are more expensive. Homeowners may be able to offer a lower-cost alternative.

Renting storage space can be flexible. You may choose to accommodate short-term rentals for those between homes or offer long-term options for items like boats or RVs.

6. Open a Home Studio

Home studios can be a perfect place to pursue a creative hobby and make extra cash. Artists, gamers, and others can establish a space to build a brand and generate profit.

The best part is that you¡¯ll be doing something you love.

7. Turn Your Home Into a Set

Owning a home in a popular film city such as Atlanta or Palm Springs presents an opportunity to rent it out as a movie set. You don¡¯t need a million-dollar mansion since many films use regular homes.

Commercial shoots also need home sets, even in smaller cities. Consider connecting with location agents, local film commissions, or apps like if you’re interested.

8. Host Events

Large properties can be rented for weddings, concerts, and other events. This may require special permits, outdoor electricity, and bathroom arrangements, which can be costly. However, a single event can generate significant income.

If located in rural or agricultural areas, consider agri-tourism activities like seasonal mazes, wine tastings, or mini-markets to celebrate local food production.

9. Share Your Parking Space

Parking can be expensive, especially in densely populated areas. If a home has extra garage or parking space, apps like make it easy to rent it out for short-term or long-term use.

If the home is near an event venue or stadium, the owner can also rent parking during events, offering flexible income opportunities.

10. Try Tutoring From Home

If you have a teachable skill, tutoring can be a great way to earn extra income. You can offer lessons in areas like academics or arts from home or virtually.

Private academic tutors average an hour, and licensed teachers may earn around $56 per hour. Music teachers average per hour for lessons.

As a homeowner, there are unique opportunities to earn extra income that renters may not have. Whether you choose to rent out space, start a business, or offer lessons, your home can help you achieve your financial goals.

Along with health and wellness benefits, some plants are believed to bring good fortune. These plants are especially popular during the Chinese Spring Festival and Lunar New Year, where they symbolize prosperity and wealth. Different plants are thought to offer different types of luck.

Whether you¡¯re looking for a housewarming gift or hoping for good fortune during your and house-hunting process, these lucky plants can enhance your home¡¯s atmosphere.

1. Citrus Trees

Citrus trees are fragrant, beautiful, and provide delicious fruit. Many varieties of citrus are associated with luck, especially because some citrus fruits are , symbolizing wealth.

Citrus trees are popular gifts for the Chinese Spring Festival, and it is believed that the more fruit a tree bears, the luckier it is. However, these trees require specific care, so it¡¯s important to research their before choosing one.

2. Ginseng Ficus

Scientific name: Ficus retusa

The ginseng ficus, originating from Southeast Asia, is a popular choice for bonsai. It features thick roots that grow above the soil, topped with dark green, oval leaves.

Ginseng ficus plants are and are well-suited for those who may not have much gardening experience. They are considered lucky in feng shui and are noted for their air-purifying qualities.

3. Money Tree

Scientific name: Pachira aquatica

The money tree is said to bring financial fortune, particularly when placed in the “wealth corner” of your home, which is typically the southeast corner according to feng shui. Placing it in areas like an office is also believed to attract prosperity.

This tropical plant is and is thought to promote positive financial energy at home.

4. Peepal Bonsai

Scientific name: Ficus religiosa

The is revered in Hinduism and Buddhism. It is said that Gautama Buddha achieved enlightenment under a peepal tree, and the plant symbolizes good fortune, happiness, and long life.

These fig trees can grow tall with aerial roots, but they are also well-suited to pots and bonsai care. Before purchasing, it’s helpful to understand the for this plant.

5. Rubber Plant

Scientific name: Ficus elastica

Rubber plants are believed to represent abundance, happiness, and wealth. They are another popular choice for a home’s wealth corner according to feng shui.

This plant has round, dark green leaves that can fit well with many home decor styles. Rubber plants are natural air purifiers and are relatively , although their leaves can cause skin irritation if touched directly.

6. Adenium

Scientific name: Adenium obesum

Adeniums, commonly known as ¡°,¡± are considered lucky during the Chinese Spring Festival. Their swollen roots are thought to symbolize abundance and fertility.

Adeniums produce beautiful flowers, often called desert roses. Red and pink varieties are considered especially lucky. This is hardy but may struggle in cold weather or shaded conditions.

7. Eucalyptus

Scientific name: Eucalyptus globulus

Eucalyptus is known for its refreshing and energizing scent. This soothing fragrance is often associated with cleanliness and new beginnings.

in warm and humid environments, making them well-suited for bathrooms or kitchens.

8. Golden Pothos

Scientific name: Epipremnum aureum

Golden pothos is another plant associated with attracting wealth and reducing stress. According to , golden pothos vines can protect your home and minimize negative energy, especially when placed in bathrooms.

and can be trained to grow vertically to enhance home decor.

9. Jade Plant

Scientific name: Crassula ovata

The small, round, and vibrant leaves of the jade plant resemble jade coins, symbolizing growth and wealth. Jade plants are believed to when placed on the east side of the home or in offices.

Jade plants are , but they require specific watering needs. Adequate water and sunlight are essential for the health and longevity of these plants.

10. Lucky Bamboo

Scientific name: Dracaena sanderiana

Lucky bamboo is a common gift, symbolizing well wishes and prosperity. The in a lucky bamboo arrangement determines the type of blessing it offers to the recipient.

Lucky bamboo grows well in water but can thrive in soil as well. It is relatively , but it is toxic to dogs and cats, so it¡¯s not ideal for pet-friendly homes.

11. Snake Plant

Scientific name: Sansevieria trifasciata

Snake plants are known for their ability to and reduce allergens in the air, making them a great addition to any home for improving air quality. They also produce humidity, making them a good companion plant for tropical plants.

Snake plants are hardy and can survive in a variety of conditions, but care should be taken to avoid excessive watering and exposure to freezing temperatures. Learn more about to ensure they thrive.

12. Lavender

Scientific name: Lavandula

Lavender is renowned in aromatherapy for its calming and relaxing properties. It can be used to make scented sachets, syrups, and teas, and is considered lucky by many, including the character Sally Owens from .

While lavender is typically grown outdoors, it can . It requires dry conditions, good drainage, and plenty of air circulation to grow well.

13. Orchid

Scientific name: Orchidaceae

Orchids are considered a symbol of good luck and prosperity when given as a gift. They can also a happy marriage, career success, beauty, and strength.

Orchids are known for being , but with proper care, they can thrive. They are tropical plants that grow on trees or rocks, so it¡¯s essential to understand the needs of your orchid variety to ensure proper care.

14. Peony

Scientific name: Paeonia

Peonies are associated with . They bloom in various colors, with red peonies believed to bring extra luck.

Peonies are a , thriving in sunny locations with good drainage. The plants can be divided to propagate new plants or to share as a gift.

15. Pitcher Plant

Scientific name: Nepenthes

The pitcher plant is often referred to as ¡°´ü´üƽ°²,¡± meaning ¡°bags of safety or peace¡± in Chinese. These plants are popular gifts during the Chinese Spring Festival, symbolizing long-term wealth. The plant’s large, pitcher-shaped leaves resemble money bags, and the more ¡°bags¡± the plant has, the luckier it is thought to be.

Pitcher plants are carnivorous and come in a variety of species, with . It’s important to know the sunlight requirements of your specific variety and to ensure the plant gets enough insects to thrive.

Good luck plants can boost your home¡¯s decor and create a positive atmosphere. While they are believed to bring benefits such as wealth, relaxation, or purification, the key is to understand their care needs and how to place them in your home for maximum benefit.

Choose the right plant for your home, and enjoy a happy, healthy, and lucky living space.

The Differences Between Conventional 97 and FHA Mortgages

The Conventional 97 and the FHA mortgage are both low-down-payment mortgage options. Each has an official name that is not frequently used – the 97 LTV mortgage and the FHA 203(b), respectively – but that is where their similarities end.

Highlights: Conventional 97 Mortgage

The Conventional 97 is a low-down-payment mortgage for first-time home buyers offered by Fannie Mae. The “97” in its name refers to the loan-to-value (LTV) ratio, representing a 97% LTV, which reflects the program’s minimum 3 percent down payment requirement.

Key features of the Conventional 97 mortgage include:

• Minimum 3 percent down payment requirement
• At least one mortgage applicant must be a first-time home buyer
• No income limitations per household
• Minimum credit score requirements must be met
• Available for 1-unit homes and certain condos

Highlights: FHA Mortgage

FHA mortgages are insured by the Federal Housing Administration’s mortgage insurance program. More appropriately, they should be referred to as FHA-insured mortgages because the FHA’s Mutual Mortgage Insurance Fund insures against losses for lenders.

Key FHA loan features include:

• Minimum 3.5 percent down payment requirement
• Available to both first-time and repeat home buyers
• No income limitations per household
• Minimum credit score requirement, with flexibility for borrowers with scores as low as 500
• Available for 1-4 unit homes

Mortgage underwriting is generally more lenient for FHA loans than for Conventional 97 mortgages, especially for buyers with less-than-perfect credit.

Mortgages At-A-Glance

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Important Notice For Home Buyers

This mortgage comparison between the Conventional 97 and FHA mortgages is based on current guidelines published by Fannie Mae and the FHA. These guidelines are subject to change when mortgage guidelines are updated.

Mortgage lenders may impose additional lender overlays on top of the official mortgage guidelines. These overlays could affect mortgage underwriting and your ability to get approved.

If one lender turns down your Conventional 97 or FHA mortgage application, this does not necessarily mean that all lenders will do the same. It may be possible to get approved with a different lender.

Consult with multiple lenders about your mortgage rates and available choices.

Find Out More: Conventional 97 vs FHA Mortgages

Want to make an informed decision? Visit our comprehensive Conventional 97 and FHA mortgage guide pages. When you’re ready, you can start your mortgage pre-approval at Homebuyer.com.