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I inherited 1/3 ownership of my deceased parents' home. I want to buy out my 2 brothers. We are all in complete agreement of this.

Can I use my 1/3 portion as a down payment toward a mortgage loan to buy them out? I don't have cash on hand to buy them out right and also with credit in the 570 range, I know I will need some down. I have searched relentlessly and I am still looking for answers.

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Absolutely. Your situation isn’t as common to a bank as a new purchase, but it’s also not uncommon. People die all the time leaving a house to more than one heir. If you go to a bank, they will likely treat it as a new purchase. No need to think about a HELOC and the variable rate it brings. You are buying it from your siblings.

As long as you qualify for the loan, and your score isn’t too large a hindrance, you should be able to make this deal happen. The loan to income is likely to be the key thing here.

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    +1 The only addendum I would note is that one complication in situations like this is that a sale between family members is often not considered an arms-length transaction. This doesn't prohibit a loan or the sale, it just means there may be a few extra forms, not necessarily every loan company in existence will do it, the loan company may require they pick their own appraiser, etc. A little extra work, and there can be tax implications they should check on, but still nothing too exotic. – BrianH Feb 6 at 23:21
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    @BrianH Understood. I was a serial refinancer and never got to choose my own appraiser. I agree it’s not an arms length transaction. In the end, the appraisal with help keep it fair for the 3 siblings as well as the lender. And the credit score might be an issue. – JoeTaxpayer Feb 7 at 0:17
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Let's say the house is worth $300,000.

Theoretically, you could all three sell the house, get $100,000 each, and with $100,000 in cash you should be easily able to get a $200,000 mortgage to buy another $300,000 house. So, what you want should definitely be possible.

Since this is a bit unusual, I can imagine that you won't find any advice on the internet, but you should probably talk to your bank or to a mortgage broker directly.

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