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Down Payment
Loans and Gifts as Down Payment
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2 of 3 Down Payment
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Homebuyers often take advantage of gifts to help with the down
payment. Gifts to be used for such a purpose must fall within the
following guidelines:
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For loans with an LTV higher than 90% the borrower
must still fund at least 3% of the total invested.
·
A gift letter from the donor must be included stating
that repayment is not required
·
The donor of the gift is not a co-signer in the loan
application
The Federal Housing Administration (FHA) loan program is very
popular since it allows downpayment to come from 100% gift funds. Loans with an LTV equal to 90% or less also qualify.
Some homebuyers choose innovative ways to collect gift funds from
family members and relatives such as the Bridal Registry that
couples use to put money into an account to be used for the down
payment of a new home.
First time homebuyers may choose to borrow from their 401K
program. It is possible
to withdraw money for your downpayment without tax penalties then
pay it back over a specified period.
However, this payment will be included in your qualification
and naturally your 401K account will not grow as fast.
Any funds from a secured loan other than a loan secured by the
subject property are acceptable but these monthly payments will be
figured into the borrower’s monthly debt ratio when qualifying.
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