When obtaining a new home and mortgage, there are several things you need to know:

a) Where is my down payment coming from?

b)  If I am getting a gift of money for all or a portion of the down payment, how will this affect my loan?

For many borrower’s the down payment is the toughest requirement when obtaining a loan. Although the majority of loan programs today require a down payment, there are ways to obtain financing with less than 20%. FHA & Conventional loans allow a family member of the borrower to “GIFT” them the down payment. Below is a snapshot of what is required if you are receiving a gift for the down payment.

 

FHA Loans

  • Borrower must contribute at least 3.5%.
  • A family member may gift the full Down Payment (3.5%) to the borrower.
  • The cash required to close the loan must be in the borrowers account prior to closing.
  • Large deposits on the bank statement must be verified.

Conventional Loans

  • 5% is the minimum Down Payment for a Conventional Loan. *UPDATE* One of our lenders has a #5 down conventional loan!
  • The borrower is allowed to receive a gift from a family member.
  • If the gift is less than 20% of the sales price, the borrower must contribute 5% of the down payment from their own funds.
  • Large deposits must be verified.

This can also affect how seller paid closing costs can be used.

For more information, contact Baverman & Associates. We will help you find your new home and put you in touch with great lenders and mortgage consultants.