I often get asked if mom and dad or uncle “Larry” can help with a down payment. The quick answer is YES !! But there are some details. First for FHA loans. The gift amount can be for any amount from $1 to the full down payment plus closing costs. Now on conventional loans it’s a little more tricky. If the borrower has at least 5% of their own money to put down, then the gift can be for any amount above that. But, if the borrower has no money of their own, then the gift amount has to be a full 20% down payment on the loan. Either way there are a couple of small hoops to jump through. One is that whoever is gifting the money will have to sign a gift letter saying who they are and how much they are giving. The other is we’ll need a copy of the account statement(s) where the money is coming from. Any lender will need to “follow the money” to its source. If you plan on using gift funds please let me know, and I can guide you through this simple process.
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