For many buyers, the greatest obstacle to purchasing a home is not the monthly payment—it is accumulating the upfront funds. An eligible financial gift from a family member may help with the down payment or closing costs, allowing a buyer to move forward sooner than they could through personal savings alone.
Gift funds must usually be documented properly. The lender may need confirmation of the donor, the amount given and the fact that the money is a genuine gift rather than an undisclosed loan that must be repaid. Requirements can vary depending on the loan program, the property and the relationship between the buyer and the person providing the funds.
Discussing the gift before money changes hands can make the process much smoother. Depositing a large sum without documentation or moving money through several accounts may create unnecessary questions during underwriting. Planning the transfer with the mortgage professional allows everyone involved to understand the necessary steps.
Family support can become a meaningful part of a buyer’s path to homeownership when it is structured correctly. To learn how gift funds may be used with your financing program, please visit our website to schedule a consultation.