A family can invest in a home purchase
alongside the mortgage and down payment
Parents and other family deposit money in a Tufa account. At closing, it is invested in the Tufa First Home Fund, which invests through an appreciation-based second behind the buyer’s conventional first mortgage.
Tufa is not yet available. This page describes how it will work.
Parents or other family open a Tufa account and deposit money, all at once or over time.
A conventional mortgage, the buyer’s own down payment, and the fund’s investment.
After the mortgage is paid off, the fund receives the same share of the sale price that it invested in the purchase price, and the buyer keeps the rest.
A traditional transaction
A conventional mortgage. From the buyer’s own lender, with at least 5 percent down from the buyer.
The usual appraisal, title and closing. Nothing about the contract, inspection or closing process changes.
The buyer owns the home. The buyer holds title and makes no monthly payment on the fund’s second.
At sale
| Without a family investment | With a family investment | |
|---|---|---|
| Purchase | ||
| Home price | $450,000 | $500,000 |
| Funds | ||
| Buyer’s down payment | $50,000 | $50,000 |
| Family investment | None | $50,000 |
| Mortgage | $400,000 | $400,000 |
| Sale | ||
| Sale price, 10% higher | $495,000 | $550,000 |
| Proceeds | ||
| Mortgage repaid | $400,000 | $400,000 |
| To the fund (10% of sale) | None | $55,000 |
| To the buyer* | $95,000 | $95,000 |
Same down payment. Same mortgage. Same proceeds.
A larger home, and the fund’s investment rose with it.
*Illustration. Before selling costs, which are higher on a higher-priced home. Mortgage principal paid down over time adds the same amount in both cases.
Sample purchase transaction
- Step 1Pre-approval
The family deposits money in its Tufa account and designates it for the buyer’s home purchase. Tufa sends the buyer’s lender a letter confirming the designated amount, which the lender uses the way it would use a gift letter.
- Step 2The offer
A standard offer, and the lender underwrites a standard conventional loan. When the buyer goes under contract, the designated amount moves into the fund’s escrow account and the fund commits to the investment. If the purchase does not close, the money is returned to the family.
- Step 3Closing
The fund’s investment arrives at closing alongside the lender’s funds, and the Shared Appreciation Agreement is recorded behind the mortgage.
The home must be the buyer’s primary residence, the buyer must be a first-time homebuyer, and the buyer’s lender must agree to the fund’s investment.
The limits of a gift
More than one in five first-time buyers used a gift or loan from relatives or friends toward their down payment in NAR’s most recent survey. Many families would do more. What holds them back is that the only way to help has been a gift.
NAR · July 2024 to June 2025
A gift comes out of savings parents may need in retirement, so they give only what they are certain they will never need.
A gift to one child sets a precedent for the others. Parents weigh what they could do for every child, and often give less to keep things even.
Asking a parent to give away a large sum is an uncomfortable conversation, on both sides.
An investment changes each of these.
The same home, a smaller mortgage.
A family investment can work in either direction: a home higher in price with the same mortgage, or the same home with a smaller mortgage. See the income required to make a home price work, with and without a family investment.
Talk with Tufa
Before launch, Tufa is talking with agents about how a Tufa purchase should work in practice. Bring a question from a client, a question a listing agent might ask, or a request to walk your office through the process.