Gifting

What if my parents or family member wants to give me a gift for my loan?



That's great! Now let's see how you can use it...



Easiest option: With a FHA loan, you only have to put 3.5% down. You can receive any amount of the down payment as a gift! For example, if the loan is for $100,000 and your down payment is going to be $3500, you can receive a gift of $2000 if you want, or any amount for that matter.



Now, if you are going with a conventional loan, you can still receive a gift, but there are a couple of rules. When going conventional, you must put down at the very least 5%. You as the buyer have to have this 5% to put down. You can receive any amount over this as a gift. So, if you have a loan for $100,000, and you have to put down $5000, your mom and dad can give you an extra $2000 as long as you have the $5000 to put down.



Another way to get a gift on a conventional loan is to get 20% down. When you put 20% down, a lender has a lot less risk in the transaction so they are more willing to let this happen. So, if you have a loan for $100,000, you can receive a gift of $20,000 to make up the entire 20%.



You cannot receive a gift from any parties involved in the transaction such as the seller, the realtor, the loan officer, etc. The seller can pay for some of the closing costs. I'll talk about that soon, but if you want to ask me now, just contact me.



It is easier to have the person giving the gift to write a check at closing. If they give you the gift before-hand, the lender has to verify where the funds are coming from, verify where the gift-giver has gotten them, etc. I know it is very exciting to see an extra $5,000 in your account, but if you want to expedite things, just have them write the check at the end.