There will be times when a down payment might be tough to come by, or you find yourself on the borderline of qualification. Would it be appropriate, or even possible for your parent's or relatives to lend a helping hand?
Absolutely!
One of the ways they'd be able to help would be through the giving of a "gift". Gifts are defined as "the gift giver is providing funds to a home buyer with no expectation of being repaid."
According to Freddie Mac guidelines, "Gift funds are an eligible source of funds for a Mortgage secured by a Primary Residence or second home provided that:
1. The funds are from a Related Person
2. The funds do not have to be repaid."
As long as the person is related to you, and they sign the appropriate documentation stating that the loan doesn't have to be repaid, gift funds are acceptable to use on conventional loans*.
FHA loans* have their own guidelines regarding where gift funds are allowed to come from. According to HUD.gov, "An outright gift of the cash investment is acceptable if the donor is, 1. The borrowers relative
2. the borrower's employer or labor union
3 a charitable organization
4. a governmental agency or public entity that has a program providing home ownership assistance to Low income families and/or first-time homebuyers.
5. In order for funds to be considered a gift, there must be no expected or implied repayment of the funds to the donor by the borrower."
If a relative such as your parent's are able to provide a gift to help you with your loan, it's welcomed by those in the housing industry.
For more details on this topic, please reach out to me. I'd love to talk you through the benefits of gift's when it comes to getting into your dream home.
*disclaimer: Not all individuals will qualify for each loan type and/or scenario. Please contact me to see if you'd qualify for these loan products and/or discuss your options.
Momentum Loans NMLS #1606597
Brayden Ramsay NMLS #1997195
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