Key Takeaways A below-market loan from a relative sounds like free money, but IRS rules set a floor on what family lenders must charge. Should a relative who lent you money die before you've repaid it, the balance becomes part of her estate. A recent post on Reddit's r/Mortgages laid out a dilemma many people would love to have: Got the call of a lifetime last night. My grandma called me and decided to play bank and loan us what I presume would be our inheritance—up to $500K—at 1% interest to pay o ...