By Angela Colley | Feb 13, 2023 | www.realtor.com
In the long run, buying a home can often be cheaper than renting. But until you see the payoff, your wallet may feel some pain. And it all starts with the down payment. To avoid private mortgage insurance on a conventional loan, you’ll need to put 20% of the purchase price down on a home. But in many areas, 20% down is a sizable amount.
Sound unmanageable? If you’re lucky enough to have a family member who wants to help out, you can use gifted money for your down payment. But there are some rules you need to follow to have your gifted down payment approved.
Who can donate?
A gifted down payment can’t come from just anywhere.
“The donor of a gift used for a down payment on a home must be a blood relative, and not a party who might be interested in closing the transaction,” said Matt Weaver, vice president of mortgage lending with PMAC Bank in Boca Raton, FL.
In some cases you can also receive a gifted down payment from a spouse or fiance (or fiancee), but don’t count on getting a loan from a family friend and still getting approved.
“Lenders will look to verify the relationship and also to confirm that the funds are indeed a gift, and not a loan,” Weaver said.
Additional points in the article:
Verification letter
Proving the source
Letting the money age
Read the full article here: https://www.realtor.com/advice/finance/gifted-payments-work/
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