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.
