Today, we’re talking about the subject of financial gifts. We’ll go over when and how they can be applied toward your home purchase.
How can gift funds be used toward the purchase of your home? Well, especially when someone is buying their first home, it’s common for them to receive financial assistance from a close friend or family member.
Depending on the type of loan program you’re using, the requirements for gift fund documentation will vary. Any conventional financing will require you to provide a gift letter and proof that the funds have been delivered to the title company.
Our team has a standard gift letter form that we can send out to you. Once the person donating the financial gift to you has signed this letter, they can simply wire their funds a day or two before closing. The one stipulation of gift funds used toward a conventional loan is that the gift must come from a family member.
Now, if you’re doing government financing like an FHA or VA loan, the requirements are a little more document-heavy. A gift can come from a family member or a friend with a closely-documented interest in you, the buyer.
If the relationship can be documented, they will still need a gift letter and the ability to give the gift. Usually this proof comes in the form of their most recent bank statement. If the gift funds are wired directly to the title company, this is all the documentation you’ll need. However, if the gift comes in the form of the check, further documentation will be required.
If you have any other questions or would like more information, feel free to give us a call or send us an email. We look forward to hearing from you soon.