Wedding Season Gift Funds

February 5, 2018 By

Wedding season is fast approaching! Is fine china not your style? Does the thought of getting another George Foreman Grill make you cringe? What if instead, your loving family and friends were able to help you purchase a beautiful new home?

Most loan programs allow borrowers to use gift funds toward their down payment, though the particulars depend on the loan program. If you’re struggling to come up with all the necessary cash to close, this wedding gift might be exactly what you need.

FHA Gift Funds

These loans offer great flexibility when it comes to the gift source. While other programs require some familial or marital connection to the buyer, FHA will allow for funds from family and:

  • The borrower’s employer or labor union.
  • A close friend with a clearly defined and documented interest in the borrower.
  • A charitable organization.
  • A governmental agency or public entity that has a program providing home ownership assistance to low-and-moderate-income families, or first-time homebuyers.

Additionally, FHA allows your entire down payment to come from gift funds as long as your credit score is above a certain amount. One thing to keep in mind, however, is that gift funds can only be used on primary residences.

Conventional Gift Funds

Even if you’re pursuing conventional financing, a gift fund check could be used to purchase a home.

  • The gift source must be a relative, spouse or domestic partner.
  • There are limits on how much the gift can be, but the entire down payment can be a gift if the amount is large enough.
  • Gift money can only be used on primary residence and second homes.

VA and USDA Gift Funds

VA and USDA also accept gift funds! They must come from a family member, and because they are 100% financing, there is no limit on the amount of the gift.

Keep in mind, gift funds in all cases will need to be properly documented, so if you know you are about to receive a wedding day influx of cash, doing so by check is the easiest way to keep it convenient and compliant.

If you have questions about gift funds, give us a call today. As always, we’re here to serve you.

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