Gifting Down Payments

Receiving & using a cash gift is one of the most common processes when purchasing a new home. Most forms of cash gifts are used for the 20% down payment.

We've provided a brief breakdown of the process and how to ensure you're not denied from your lender due to in proper gifting.

Down Payments

Down payment "gifts" can make it easier to purchase a home.

Loan programs including FHA, VA, USDA, Conventional, and Jumbo loans, allow the use of cash gifts.

Commonality

First-time home buyers are most likely to receive a cash gift among all buyer types to make a 20% down payment.

You can often qualify for the lowest mortgage rates offered and with a 20% down payment, there is no requirement for PMI (Private Mortgage Insurance)

Mortgage limits are capped at $484,350 except within those high cost areas where homes exceed the national average

High Cost Areas are capped at $726,525 for single-family homes, and multi-unit homes.

Low-down-payment loans also allow cash gifts for down payment. (ie. as little as 3% down)

Down Payment Letter

There are 3 steps that should be taken in order to avoid denial from your lender:

1. Correctly Written Gift Letter
2. Documenting the Gift from the Giftor
3. Documenting the Receipt of the Down Payment Gift

**There may be tax implications for givers of a cash gift for down payment and for the receivers. Everyone's tax situation is different. Please consult a tax advisory for more information.**

If you have questions about a "Down Payment Gift." Contact Us Today! We will be happy to walk you through the process.