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Down Payment Gifts - What You Need To Know To Buy A Home

Mortgage and Lending with Chris Bonin Loan Team NMLS# 240710


"Down payment Gifts" Are Common


Gifts for down payment sometimes come from parents, grandparents, siblings, or children. They sometimes come from spouses, too.


It's common for today's U.S. buyers to receive cash down payment gifts. First-time home buyers are most likely to receive a cash gift among all buyer types, but repeat- and move-up buyers receive them, too.


Down payment gifts are also allowed for low-down payment mortgages including the FHA purchase mortgage, which requires a 3.5% down payment; and the Conventional 97 mortgage from Fannie Mae and Freddie Mac which requires just 3% down.


Step 1 : Complete "Down payment Gift Letter" provided by The Chris Bonin Loan Team


When you accept a down payment gift, remember that there's a right way and a wrong way to do it. For example, you cannot randomly deposit your cash gift into a bank account. Doing so will get your loan denied.


There's a 3-step process when accepting a cash down payment gift and no matter what your loan type -- Conventional, FHA, VA, or other -- the 3-step process is the same. Follow the rules to the letter.


First, complete a gift letter that follows the includes the following information :


The amount of the giftThe subject property addressThe relationship of the gifter to the gifteeA note that the gift is actually a gift and not a loan and will not be repaid


Step 2 : What The Giver Of The Gift Needs To Do


With your mortgage down payment gift letter written, you'll want to make sure you don't violate the rules of "taking a gift".


The giftor will want to write a check to the home buyer for the exact dollar amount specified in the gift letter you've written. Photocopy the check. Keep one copy for your records and give one copy to the buyer -- the lender will want to see it as part of the process.


Also the person who is gifting funds to the buyer will need to provide a bank statement showing where the funds are coming from.


Step 3 : What The Receiver Of The Gift Needs To Do


Now that the gifter has handed, in the form of a check, a down payment gift to the buyer, the following steps are required.


First, with the gift check in hand, the buyer should physically walk into their bank to make the deposit in-person, and keep a copy of the deposit slip.


When you get to your branch, do the following :


Deposit the gift funds into a bank accountEnd your transactionCollect a receipt for your deposit


Under no circumstances whatsoever should you "co-mingle" your gift deposit with other monies, nor with other gifts. The amount specified on your teller receipt should match exactly the dollar amount on the certified down payment gift letter.


If the amount is off by even a penny, the underwriter will likely reject your letter and the funds that came with it.


Note that if you are receiving multiple cash gifts for down payment, you should follow this process for each gift independently. Again, do not co-mingle your gifts. Be guided by your gift letter.


Call us today and we will guide your buyer seamlessly through the entire process


Chris Bonin
Chris Bonin Loan Team
Branch Manager
(281) 351-1117

Interlinc Mortgage Services, LLC




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