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Home Buying Mortgages + Lending

Get a Down Payment Gift

One of the biggest problems first time buyers have is coming up with the down payment. A solution is to use a down payment “gift” from relatives. The National Association of Realtors says that about one quarter of first-time buyers do that. But be careful – lenders have strict requirements regarding gifts. Why? Lenders are worried the gift is really an undisclosed loan, and you won’t be able to pay back both. As a result, follow this advice to make the process go smoother.
1. Verify gift limitations. FHA has none, but conventional lenders require you use at least 5% of your own money.
2. No cash. Have the money come in your bank account by a check or wire transfer so that it’s traceable, as far in advance as possible (at least a few months).
3. Obtain a gift letter from the donor. The letter verifies the amount, it is a gift, you’re related, and that repayment is not required.
All loan requirements are more stringent now. Start early on the process of saving and getting pre-qualified, and let me know if you need a referral to a lender we trust.

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