5 Tips for Ventura County Home Buyers Who Use Down Payment Gifts
If you are in the market for a Ventura County home and have relatives that will give you money for the 
down payment, please read this and discuss this in specifics with your lender. No one wants any nasty surprises to derail a transaction for the home of your choice.
About a quarter of first-time home buyers use gifts from relatives to fund a down payment for a home purchase, according to data from the National Association of REALTORS®. But lenders are carefully scrutinizing such gifts.
“Basically, the banks want to make sure that you’re not getting a second loan,” Ray Mignone of Ray Mignone & Associates, a financial planning firm, told The New York Times. “If all of a sudden $50,000 pops into your account, they want to make sure it’s not a loan against the property that they’re going to put a mortgage on.”
In a recent article, The New York Times provided some of the following tips in making make these lenders’ checks and balances go smoother for home buyers:
- Have the money come in a check or wire transfer so that it’s traceable. Lenders often become cautious over cash gifts.
- Have the giver provide the lender with a gift letter, which verifies the money is a gift, the specific amount being given, the relationship to the borrower, and that repayment is not required.
- Deposit any gift money into the borrower’s account a few months before applying for a mortgage so the lenders have fewer questions about it, Mignone says.
- Consider federal gift-tax regulations: Individual gifts of more than $13,000 must be reported to the IRS and are subject to tax.
- Be aware that certain types of mortgages may limit how much of a down payment you can receive as a gift. For example, with conventional loans, lenders may require at least 5 percent in the borrower’s own money that is not a gift. However, Federal Housing Administration loans — which are popular among first-time home buyers — do not have any limits on gifts and borrowers can use gifts to cover the entire down payment.
Source: “To Givers of Down Payments,” The New York Times (Dec. 27, 2012)