Mortgages: Gifts

If you know that you’ll be getting any financial gifts to help with your down payment, you should be prepared to thoroughly document all gifts, in order to comply with today’s mortgage guidelines. Please note that our underwriters allow gifts for up to 100% of your down payment and closing costs.

Here is what you need to know:

Gifts can only come from immediate family (spouses/fiancés, parents, grandparents, siblings, aunts/uncles)
Cash can NEVER be gifted on a mortgage transaction.
The latest that all gifts can be deposited into your checking account is 2 weeks before your anticipated closing date on your new home. However, we strongly suggest that you deposit all gift checks as early as possible; ideally before finding your home and even before beginning your home search.

You will be required to provide the following gift documentation to your mortgage underwriter:

A fully filled out and signed gift letter (your loan officer will prepare it for you: please provide them with the gift amount and the name/address/phone number/email address of the person who is giving you the gift, so that the gift letter could be prepared and sent to everyone for their review and their electronic signatures)
A copy of the gift check and the deposit slip showing that the money was deposited into one of your bank accounts that was listed on the loan application. Cash cannot be used and we highly discourage direct bank transfers. Gift checks (or wire transactions) are the easiest to document.

If you are applying for FHA financing, the following documentation is also required:

Gift giver’s most recent bank statement (all pages) showing available funds is required on 100% of government (FHA) loans (no exceptions can be made). We suggest that our buyers always provide it to us upfront if you are applying for 3.5% down FHA financing. The reason that it is needed is to document that there were no suspicious cash deposits from interested parties (realtors, sellers, mortgage brokers, etc.) around the time when a gift check is drawn. If a gift giver does not feel comfortable providing the statement to you, he or she can email or fax it directly to the loan officer and the information provided will remain confidential. Full statement has to be provided (all pages) and no information can be redacted/whited out.
How to avoid documenting the gift altogether: Mortgage lenders typically look at your bank statements for the previous two or three months, so if your gift is deposited well before you apply for a loan, the money becomes “seasoned” and none of the above gift documentation is necessary. This strategy doesn’t negate the genuine gift requirement, however. If the money involves any expectation or implication of repayment, it is not a true gift, but a loan that will have to be disclosed and could affect whether you qualify for a mortgage.

Any questions? Please contact your loan officer or call us at 314-329-7314

Posted by: Carlson Mortgage – a top-rated St. Louis mortgage broker providing home loans in the state of Missouri. We are routinely ranked as a #1 mortgage broker in Missouri on Yelp, Google and Zillow. We can be reached at (314) 329-7314 seven days a week.

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