Gift of equity
A seller can transfer part of the home's equity to an eligible buyer instead of the buyer bringing that amount in cash.
Fannie
A gift of equity is permitted on eligible principal-residence and second-home purchases and can fund all or part of the down payment and closing costs, including prepaid items.
Not reserves
Fannie expressly prohibits using a gift of equity to satisfy financial reserve requirements.
Not automatically an IPC
When the seller is an acceptable donor and satisfies Fannie's requirements, the gift of equity is not treated as an interested party contribution merely because the donor is also the seller.
Official guide baseline
Fannie Mae Selling Guide · Freddie Mac Seller/Servicer Guide
Program terms, AUS findings and lender overlays control. DPA program eligibility must also be verified with the program administrator.