Yes, your down payment money can be a gift. Your closing cost money can be a gift, but you’ll want to discuss all of this with your lender when you are getting your pre-approval to purchase a home. When buying a home, you want to work closely with your lender to meet your financial needs and get you into the home you desire.
Anytime anyone other than the buyer gives money for the down payment it is considered a gift. Your Realtor can never give you a gift for a down payment or for the earnest money. The only funds that can be given between your Realtor and you (the borrower) are concessions per the contract- and these would fall under the seller/Realtor concession guidelines and can be used only for closing costs- never for down payment.
Below is a summary of gift rules for the different types of loans:
FHA:
Buyer can get a gift from a family member for down payment and closing costs without putting a minimum down payment of their own funds. The gift must be documented by:
1. Letter from family member stating relationship, amount, source of funds
2. Documentation showing the donor had the funds at least 30 days prior to giving to borrower (ex: bank statement)
3. Back up documentation showing the withdrawal of the funds from the donor’s account and a copy of the cashier’s check or wire transfer (made out directly to title company.)
VA:
Buyer can get a gift from a family member for down payment and closing costs without putting a minimum down payment of their own funds. The gift must be documented by:
1. Letter from family member stating relationship, amount, and source of funds
2. Copy of cashier’s check or wire transfer
CONVENTIONAL:
Buyer can get a gift from family member as follows:
1. If loan to value is over 80%, then borrower must have their first 5% of down payment from their own funds
2. If loan to value is 80% or less, then all of the down payment can be a gift.
3. Gift letter to be completed and copy of the cashier’s check or wire transfer
If you will be using gift money for any of your real estate transaction, always talk to your lender about it. They can advise you on the best course of action. I personally recommend Mike Lesmeister with Ameripro Funding. You can call my office at 281.288.3500 and ask to be transferred to Mike for a pre-approval.>”http:///search.htm?route=search&q=”;
