Changes in Gift Funds - Fannie Mae

Mortgage and Lending with Fairway Independent Mortgage

Changes to the gift rules for Fannie Mae.  The minimum downpayment for a conforming Fannie Mae loan is 5%.  Previously this 5% had to be from the client and they could have additional money gifted for a larger down payment. 

Under Fannie Mae's new lending guidelines, now in effect, securing a mortgage is easier for some borrowers and more difficult for others. These new rules will allow buyers to use gifts and grants from nonprofit groups for their minimum 5 percent down payment. Freddie Mac is also considering a similar change but has not rolled anything new out yet.

These new rules are "definitely going to help upgrade buyers and young couples who for whatever reason don't have enough money and are getting some needed cash from their families," said Edward Ades, owner of Universal Mortgage. With the economic times as they are - I will take a wait and see on whether there will be a true benefit but it does open some doors.  If the parents or a family member of the buyer is in a postion to gift money - it does make the process less costly to the buyer.  Just remember to follow the traditional documentation requirements with verifying and sourcing the money.

The new gift rules apply only to purchases of single family primary residences and cover conforming mortgages submitted to Fannie Mae.  There is also an article in the Daily Real Estate News about this change.

For the right client, this change coupled with the first time home buyer credit available for qualified NC buyers - this could be a great opportunity for some new home sales!


Posted by

Take care,

Ken Land

Senior Mortgage Planner

704-641-8363 Cell

704-200-2325 Office

8430 Rea Rd Suite E

Charlotte, NC  28277

Apply only at your convenience!

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Comments (3)

Edward Peterson
eDrake - Hamden, CT
eDrake; CT

This sounds good for some business I believe that a should come from them or their family not subsidized notany arms length third party. Personal financial responsibility is going to make home ownership stronger and possibly eliminate the collapse of markets such as we are experiencing and the initial bubble that created it.

Jan 04, 2011 12:48 AM
Richard Byron Smith, NMLS #184479
Mortgage Loan Officer, Fairway Independent Mortgage Corporation NMLS #2289 - Chattanooga, TN
Mortgage Loan Officer

This change is surprising given the pervasive emphasis on "skin in the game," I think it is one of the few regulatory actions that make sense in our market.


Jan 04, 2011 01:10 AM
Ken Land
Fairway Independent Mortgage - Weddington, NC

Richard - that was my same initial take on this as well.  I like how it opens doors up for the right client. 

Good luck out there!  Side note - are you the same Richard Smith that comments on Ratewatch?  I have wondered for a bit if it was you.  Great insight if so!



Jan 04, 2011 01:29 AM