Gift Funds and Mortgages
/Dan Hubrich is back this week to explain how you can use gift funds towards down payments and closing costs when getting a mortgage.
This month I’d like to talk about gift funds. If you are short on funds for your down payment to buy a house, you are allowed to get a gift from a family member to cover the difference. Fannie Mae and Freddie Mac used to have a lot of restrictions around this but they’ve loosened up the guidelines quite a bit and now it’s pretty simple. The gift can come from pretty much any immediate family member (parent, child, spouse, partner, grandparent, cousin, aunt/uncle, etc.). It cannot be from a friend though unless they will be on the loan with you. The gift can cover any or all of the down payment and all we need is a form signed by the gift donor and receiver that states it’s not a loan and nothing is required to be paid back to them. Then we just need the seller to wire the funds to the title company at closing and we need statement from them showing that they had the money and that it wasn’t a cash advance, etc. The only restriction is that gift funds are not allowed for investment property. If you have any questions on this, feel free to reach out anytime.