Mortgages For America

Home Mortgages & Financing Stateline Nevada / South Lake Tahoe California

  • Main Website
  • Blog
  • Reviews
    • Zillow Reviews
    • All Reviews
    • Leave a Review
  • Manufactured / Mobile Home Loans
  • Contact

Can You Give a Relative a Gift of Cash for a Mortgage Down Payment? Yes – Here’s How

October 20, 2015 by Ken Burrows

Can You Give a Relative a Gift of Cash for a Mortgage Down Payment? Yes – Here’s HowA new house is a major investment. Even if you have a mortgage, the bank and the seller will still expect a sizeable down payment. That’s why lots of people regularly gift down payments to friends and relatives – it’s a great way to help young people start out on the path of home ownership.

But what are the rules around gifting down payments? Can you simply give someone everything they need? Although it’s a generous thought, it’s not always possible – here’s what you need to know.

Make Sure You Write a Gift Letter

If you’re giving one of your relatives money for a down payment, you’ll need to accompany the money with a gift letter. A gift letter is a letter written to the mortgage company that clearly asserts the money is a gift, not a loan. There are several key components that mortgage companies need to see on a gift letter, so make sure you have everything they need.

You’ll need to include your name, address, and phone number, as well as your relationship to the homeowner and the amount of the gift. Your letter should list the date on which you gifted the money and clearly explain that you do not expect to be repaid. Finally, you’ll need to include the address of the property being purchased and then sign the letter.

Tell Your Relatives to Pay the Right Down Payment Amount

When your relatives give their down payment, they’ll want to ensure they pay the right amount from their own money to ensure they don’t run afoul of any mortgage laws. In a conventional mortgage agreement, the borrower can pay the entire down payment with a gift if their down payment is worth at least 20% of the purchase price. If the down payment is for less than 20%, then the borrower can use gift money, but must also put forward a certain minimum amount that varies by loan type. For mortgages insured by the Federal Housing Administration or the Department of Veteran Affairs, the rules are slightly different.

Giving the gift of a mortgage is a great way to help friends or family members become homeowners. But with mortgages, there are strict rules around gifts. Contact your trusted mortgage professional to learn more about giving the gift of a mortgage.

Filed Under: Home Mortgage Tips Tagged With: Down Payments, Home Mortgage Tips, Mortgages

Ken Burrows

Mortgages For America
298 Kingsbury Grade, Suite 2E
Stateline, NV 89449
Apply Now
Get a Free Rate Quote


Connect with Us

Subscribe To Our Blog!

Enter your email address:

Recent Articles

  • Why Your Kitchen Features Matter
  • What’s Ahead For Mortgage Rates This Week – February 6, 2023
  • 3 Tips To Consider When Buying A Home With An FHA Mortgage
  • Tips for Vets Looking to Start and Grow a Green-Building Business
We've been helping customers afford the home of their dreams for many years and we love what we do.

NMLS: 993846
NMLS Consumer Access

Contact

Ken Burrows
Mortgages For America

298 Kingsbury Grade, Suite 2E
Stateline, NV 89449

Office: (888) 320-7888
Mobile: (775) 580-7115
Fax: (866) 328-4456

Copyright © 2023 · Powered by MySMARTblog