What does "Shared appreciation mortgage (SAM)" mean?

A shared appreciation mortgage (SAM) reduces your equity growth because the lender receives a percentage of the home's appreciation. For example, if your home appreciates by $50,000 and your SAM agreement specifies a 25% share, you would owe the lender $12,500, reducing your effective equity gain. Over time, this arrangement can significantly impact the amount of equity you retain as the home value increases.

When entering into a shared appreciation mortgage (SAM), you can expect lower upfront costs, such as reduced closing costs or interest rates, compared to a traditional mortgage. However, you will share a percentage of your home's appreciation—typically 25% to 50%—with the lender when you sell or refinance. Additionally, other costs like property taxes and insurance remain comparable to those of a traditional mortgage.

Eligible borrowers for a shared appreciation mortgage (SAM) often include first-time homebuyers or those purchasing in areas with high appreciation potential. Lenders typically assess your credit score, income, and the location of the property. A SAM might be right for you if you seek a lower interest rate and plan to stay in the home long enough to benefit from potential appreciation.