Family help on down payment?

[dead9uy]

Sorry if this topic isn't purely credit related but thought I would throw it out there as a lot of people are well-informed here. 

Our situation, GF and I have been house hunting and had an offer accepted on a place. We really like it and the loan process is underway. 

My GF's dad has offered to help with the down payment as an investment. This is FHA, so 3.5%, and in exchange he is asking for 25% of equity upon sale, minus any paid principle. We would also have to pay back that 3.5% as well at that time. 

To me it seems like a lot to give up for so little help. In the area we're buying I see a lot of potential for appreciation in this house and we will likely be there for at least 10 years. 

Thoughts?

We are in a position to pay for it ourselves but it would require liquidating an IRA account to do so. 

[Sunshine85]

That offer is unreasonable- there's more I want to say, but I'll leave it at that.

Use the IRA and tell your girlfriend's father, "thanks, but no thanks."

[aussiesareforever]

I agree. That is A LOT to ask for from anybody. I would walk away from that offer and try to find your downpayment elsewhere

[drkaje]

So if you and DGF break up, her dad owns 25% equity in the house?!

Reads like a terrible deal and idea.

[Anonymous]

Additionally, most lenders (probably all) will require the provider of the gift funds to sign a note saying, basically, that they have no interest in the house or expect any payment or considerations... If they don't, then at best it's a personal loan (which has all sorts of effects on the loan) and at worst will put another lien on the house... Nothing good can come of it.

Side note, I would never buy a house with a GF - renting is a different story - but that's probably a topic for the "Relationships" forum.

I think he's testing you to see if you're smart enough for his daughter