WHAT TO KNOW ABOUT DOWN PAYMENT GIFTSSeptember 17, 2020 | By Chuck
While it may seem silly, there are a few things to know if you are lucky enough to Give or Receive a House Down Payment this holiday season.
The number one thing you should know is Who Can Give a Down Payment Gift?
Because lending companies want to ensure that their loan recipients are able to repay loans. This means that there are requirements to ensure that a Down Payment Gift is a true gift and not a loan to another person or organization.Down Payment gifts cannot come from Sellers, Real estate agents or brokers, Home builders, or Anyone with a vested interest in selling the house.
For most loans, up to the full amount if the down payment may be gifted, but you should talk with your lending agent to be sure. The Gift Giver will also need to complete a Down Payment Gift Letter that explains the relationship between the gift giver and recipient and affirming that there are no expectations of repayment on this gift. This letter will need to be signed by both parties but does not need to be notarized.
There are certain instances where loan types or lenders may have additional requirements, so if you know that all or some of the down payment will be gift money, make sure to tell your lending agent from the start.