First-time homebuyers often struggle with saving for a down payment. Receiving money as a gift will not solve the problem. Both the recipient and the giver have to follow certain gift money rules.
The mortgage loan and the borrower’s credit score will determine how much is required for a down payment compared to how much can be contributed as a gift. Knowing the rules for the particular loan is a necessity.
Gift money has to come from a family member. Contributions from friends are typically not allowed. A spouse, domestic partner, or fiancée are accepted.
Lenders will require 2-3 months of bank statements. Any large deposits within that timeframe will need to be explained and documented. A gift letter for the gift deposit will be required. The gift letter will provide the donor’s information/relationship and state the money provided is being gifted, not a loan.
In order to satisfy the lender’s requirements, make sure to do your homework. Following your lender’s requirements will help a new buyer purchase their new home without any issues.
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