Free generator

Family loan agreement & promissory note generator

A written promissory note is one of the three things — alongside a real repayment schedule and interest at or above the AFR — that keep a family loan a loan in the eyes of the IRS rather than a taxable gift. Fill in the details below and download an editable Word document you can review with your attorney and sign.

Loan details

Minimum IRS rate (AFR): 4.87%.

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About this template

Is this a legally binding contract?

A promissory note becomes binding when both parties sign it. This generator produces a solid starting template with the standard clauses — promise to pay, interest, repayment, prepayment, default, and governing law — but you should have an attorney review it for your situation, especially for large or secured loans.

What interest rate should I use?

At least the Applicable Federal Rate (AFR) for your term, so the loan isn't treated as a gift. The generator pre-fills the current AFR; you can change it.

Does this cover a secured loan (mortgage)?

This is an unsecured note. Securing a loan against a home adds a mortgage or deed of trust, recording, and title work — get an attorney involved for that.

Keep reading

Intra-family loans: the complete guide Family Loan Calculator How to lend money to family

This generator provides a general template, not legal advice, and does not create an attorney-client relationship. Laws vary by state. Have a licensed attorney review any promissory note before signing.