June 03, 2021 at 8:47am | Lisa Crumby
Did you know that you can use gifted funds from a family member as a down payment on your Denver home?  It's TRUE!  We often are asked about down payment assistance programs for buyers, but rarely asked about the 'what if' funds are provided by a family member? This is a great topic that we'd like to share more details about as 'gifted money' is becoming more common for buyers to receive for their down payment🎁.

First things first.. WHO can give the gift for the down payment? 👴👩The majority of home loans require the gift to be from a family member such as: parents, grandparents, siblings, spouses, or other individuals whom are related by blood, marriage, adoption, or legal guardianship.

Conventional Loans - if you are applying for a conventional loan, the gift must come from family (by blood, marriage, adoption, legal guardianship, fiance's, domestic partners).

FHA Loans - receiving gift money when applying for an FHA mortgage is similar to the above, however, FHA also allows gifts from employers, labor unions, and charitable organizations.

VA Loans - these loans are a little more lenient when it comes to receiving gift money.  Anyone the buyer has a relationship can provide the gifted funds, but...the person providing the money may not be an interested party in the transaction.  

💸Most mortgage companies will accept gift funds as long as you provide a gift letter and various documentation:
  • Gift Letter
    • Name of donor and buyer
    • Their relationship
    • Date gift received
    • Amount of gifted funds
    • Statement it is a gift and does NOT need to be paid back
  • Document Funds Received
    • Bank statement
    • Proof of wire (if applicable)
    • Copy of check and/or deposit
Word of advice - Talk with you tax representative to confirm any tax obligations regarding gift receipt.  And if possible, try to get your gifted funds well before closing so your lender can property document all sources.

**IMPORTANT - 🏡🏡Always keep in communication with your lender throughout your entire home buying process. You don't want to jeopardize losing your dream home due to misinformation.

If you have additional questions about down payment assistance, let us know - we'd love to chat with you😊.

Happy Home Buying!



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