Are you looking to purchase and are getting a little help from mom and dad?
Well we have some great news! Guidelines have just loosened up on high balance loans, or loans available in high cost areas such as San Francisco Oakland and Alameda with the loan amounts between $417,001 and $625,500.
Recently a borrower had to have their own funds of 10% down to qualify for conventional financing, gift funds were not allowed with 10% down.
Now, a borrower who is purchasing or refinancing, may receive a gift to be used towards the down payment, prepaid items, closing costs and financing costs (unless otherwise specified).
For primary residences or second homes, the borrower must use his or her own personal assets for the minimum cash down payment of 5% on loans greater than 80% Loan to Value or LTV. For primary residences or second homes, the entire down payment may be from a gift when the LTV/CLTV is 80% or less.
Note: Gift funds are not allowed on investment properties
A gift must be from the borrower’s spouse, parent, child or dependent or any other individual related to the borrower by blood, marriage, adoption or legal guardianship or from a domestic partner, fiancé or fiancée.
The Gift Letter:
A gift letter must from the donor always be provided. The gift letter must be maintained in the file and must:
• State that the funds are given by a relative and specify the relationship to the borrower
• State that repayment is not expected or required
• Be signed by the relative (donor) and borrower
• Include the donor’s mailing address and telephone number
• State the dollar amount of the gift
• Include the subject property address
Documentation of Gift Funds:
The loan file must contain written evidence of the transfer of funds from the donor to the borrower.
For more information on transferring gift funds and how to structure your transaction feel free to call me 510.282.5456 or visit www.garrick.biz. My team and I look forward to helping you!