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The Low Down on Gift Funds

November 16, 2015 — 2 min read

Gift Funds for Mortgage

First-time homebuyers needing help with their down payment often find it in the form of gift or grant funds. Many loan programs allow for 100 percent gift funds, requiring little-to-no borrower contribution of their own funds. Just like a borrower's income needs to be verified, so do any gift funds used to finance a home. There are certain regulations that need to be followed any time a borrower receives a gift, and each loan program has its own stipulations. Acceptable gift fund donors include:
  • A borrower's relative
  • A domestic partner
  • A borrower's employer or labor union
  • A charitable organization
  • A homeownership assistance program that supports low and moderate-income families and first-time homebuyers
Lenders require a paper trail of funds and a signed gift letter by the donor and borrower containing the following information:
  • The donor's relationship to the borrower
  • The donor's name, address and phone number
  • The dollar amount of the gift
  • A statement that funds are considered a gift with no implied repayment to the donor by the borrower
  • Proof the gift is the donor's own funds
  • Documentation of funds transferred to the borrower and receipt of funds by borrower
Here are some general guidelines for eligible gift funds and grant funds as a down payment source: Gift Funds
*Loan program requirements vary. Additional terms and conditions may apply. Call for details.

Have questions about gift funds or grant funds to close? Contact us today!

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