Explaining the Essentials to Down Payment Gift Assistance

26 Feb


Explaining the Essentials to Down Payment Gift Assistance

I’ll help you buy or sell your home in Louisville, KY. If you’re looking to buy a home, I’ll help you pick the right home for you. If you’re thinking about selling, call me and I’ll tell you what price you home is most likely to sell for. Click here to search a available homes on my website.

I’ll be explaining down payment gift assistance today, and what I mean by that is if someone were to give you money as a ‘gift’ in order to help you pay for your down payment on a home. It is understood that 25% of new home buyers will get a gift in one form or another. Lenders will often scrutinize these sort of gifts because they fear that this is just another loan. To avoid a fiasco like this, I have some easy steps you can follow:
  • These gift funds need to be given to you in the form of a direct deposit or through another lending company, but they cannot come to you in the form of cash because that is an unverifiable form. Lenders will not like to see this, so avoid cash gifts.
  • gift letter must be signed by the giver that says these funds are a gift, and that any sort of exchange for the gift will not take place.
      • You have to remember that not only you will be scrutinized, but your gift giver will also be looked at by the lending company. The lenders will likely want to know bank information, so be sure you can verify all the necessary data.

     

  • Different Limits for Different Programs: Different lending programs will allow different limits for these types of gifts, so be sure to check this before you go with a certain lending program.
  • Seasoned Funds: If you expect to buy a home in the next 3-6 months and are also expecting a gift deposit to purchase one, then have that put into your account a few months beforehand. This will surprise a loan officer because by that point, these funds will be considered ‘seasoned’.
  • Understand Federal Gift-Giving Guidelines: This goes for both you and the gift-giver. Once a gift surpasses a certain limit (somewhere around $14,000), there will be some taxes applied to it.

This is a short synopsis on the rules relating to down payment gifts, so if you don’t quite understand them, then be sure to contact me because I would like to help you with your home-buying experience. Also, if you need any assistance with real estate in the greater Louisville area, then feel free to contact me as well.

You can call me at (502) 220-4663 or email me at toddmartin@realtor.com

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