Will your down payment be a gift?

Gifts from relatives and domestic partners are an acceptable source for both down payment and closing costs when financing a primary residence or vacation home. Gifts cannot be used when financing a rental property.

Here are some important things to know about the documentation required to verify gifted funds:

  1. Accunet will prepare a Gift Letter for both you and the gift donor to sign, detailing the amount of the gift, your relationship with the donor and stating the money is a true gift and not a loan.
  2. Make a copy any gift checks received. After a gift check is deposited, we will also need documentation from the donor that the gift check was cashed. Typically, a copy of the back of the gift check is available through most online banking sites, or the donor can provide a copy of their bank statement showing the gift check cleared their account.
  3. We also need to verify the gift check was deposited into your bank account. A copy of a deposit receipt or an online account transaction history are the two ways this can be accomplished.

If it sounds like we’re creating a paper audit trail for the gift funds, you’re right. That’s exactly what we need to do.

 Gifts from domestic partners or fiancés –

If both partners in a relationship are applying for the loan, there’s generally no issue. What gets tricky is when only one partner is applying for the loan but some or all of the down payment is coming from the non-borrowing partner. In these cases, we need to verify that an actual previous relationship exists, typically by showing both parties have lived at the same address for a significant period of time. The gift check from the donor showing the same address as the gift recipient is a good source of documentation for verifying common residency. In the case of couples engaged to be married, a newspaper announcement of the engagement or copy of the wedding invitation itself can also typically be used as documentation of the relationship.[elementor-template id=”10109″]

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