U.S. parents can provide mortgages to their children at the Applicable Federal Rate (AFR) published monthly by the IRS, which is typically lower than retail market rates. For example, the long-term AFR for August 2026 is 4.92%, applicable to loans over nine years, and children do not need to pay gift tax on the interest rate discount. To ensure the loan is not reclassified as a taxable gift, a written promissory note must be signed, a lien recorded, and automatic payments set up. Additionally, the annual gift tax exclusion of $19,000 per donee in 2026 can be used to forgive part of the loan each year, and married parents can jointly forgive $38,000 per child.