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Documenting Your Assets – Verifying Your Down Payment
Gifts
Especially when buying
a first home, some borrowers need help coming up with the down
payment. Family members are often a good source of assistance. Mom,
pop, grandparents, brothers, sister, aunts and uncles -- all are
acceptable. Gifts from non-family members are generally not
acceptable unless you can document a close past relationship. In
other words, your friend or coworker is not generally acceptable.
If you do get help from
family member, lenders require this to come in the form of a "gift."
If you're really borrowing the money from your family member,
intending to pay it back later -- your lender doesn't want to know
about it. With rare exceptions, you are not allowed to borrow money
to come up with your down payment.
Your lender will supply
you with a form called a "gift letter." The gift letter states the
relationship between the parties, the address of the purchased
property, the amount of the gift, and sometimes the source of the
funds used to make the gift. The gift letter also clearly states that
the funds are a gift and not required to be repaid. You and the
person providing the gift will have to sign the letter.
With most lenders, the
donor will have to also provide evidence that they have the ability to
make the gift. This can be in the form of a bank or stock statement to
show they have the funds available. You should also make a copy of the
check used to make the gift and keep a copy of the deposit receipt
when you deposit the gift funds into your bank account or escrow.
copyright 2000 by Terry Light and RealEstate ABC, modified 2002
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