Whether you are a millennium, first time home buyer or a seasoned home buyer in the Northern Virginia area we may need that extra financial help to achieve the American dream to own a home. While many of us are blessed to have family who can help us if needed. There are situations where friends have become a bigger part of our life. They are essentially family! They step up to help us out to bridge that gap of financial need we may have or moral support we need.
Are there rules for downpayment gift money?
While I am certainly not qualified to make any financial statement!
However, the purpose of this blog is to share my experience just this past year that I personally had to deal with.
In one of the instance, the lender rejected the loan. The contract had to be voided since the funds from friends cannot be used for down payment period. The buyers did not qualify without those funds or for any other loan program. It was a long and complicated situation. The buyer had to forfeit their earnest money deposit apart from the cost of home inspection and appraisal fees already paid by the buyer.
The other situation was with a new construction. The deposit was held which was a gift money from a friend. When the builder's lender flagged the purchase the buyer was given the option to switch lending type where they needed to put less down payment however loan program was expensive or bring his own money or void the contract. In this case since the delivery of the home was still a few months away these home buyers could make arrangement to bring the cash to the table without voiding the contract.
We all have a heard the proverb "A Friend in need is a Friend Indeed." Unfortunately, it may be true and with honest intention but your lender does not see it the same way!
If you are considering buying a home best advice as a local real estate agent I can recommend is speak with your lender before you submit an offer. If you are going to receive funds from other sources discuss the implication and qualification based on your situation. Do your due diligence!! It's your responsibility!