If your are on the “Nice List” this year, perhaps someone may gift you the down payment for a new home. Most mortgage programs allow for the homebuyer to receive a gift from a relative (or person with an established relationship) for the purpose of purchasing a home.
FHA home loan programs require a minimum 3.5% down payment, and the entire down payment may be a gift. The homebuyer and the gift donor must sign a “gift letter,” and the donor must document that they have the funds to provide the gift. This requirement can be satisfied with a copy of the donor’s bank statement.On conventional loans, Fannie Mae and Freddie Mac allow for gifts, but will require the homeowner to have a down payment of at least 5% of the sales price that comes from their own funds. The remainder of the down payment can be a gift. However, some upcoming guidelines from Fannie Mae will allow for the entire down payment to be a gift.
Also, it is possible to gift the equity of a property and not just cash. For example, if parents want to sell a property to their son or daughter, they can gift any amount of equity that they want as part of the transaction so as to reduce or eliminate their child’s contribution to the down payment.While Santa Clause may not be a legitimate gift donor, being on the “Nice List” of ones relatives may improve chances for receiving a gift for the down payment of a new home this Holiday Season.
Chris Mozilo, CMB
Chris Mozilo NMLS# 183726; AZ LO-0912308; BKBR-0115591; CA-DOC 183726
