Purchasing a home in today’s economy can be a bit tricky; in particular, the securing of an adequate down payment which typically runs from 10% to 20% of the price of the home. This could seem to be a daunting task of saving up sufficient funds, but it doesn’t necessarily have to be. It is becoming increasingly common for family members and friends to give monetary gifts to help out with the purchase of a new home. These “gift funds” are a fantastic way to procure the money that will be needed for down payments or even to put toward closing costs.
There are a few things you need to know about gift funds in order that you have exactly what the lender needs to be able to satisfy the mortgage underwriter. For the most part, you will need to produce five forms of documentation for the transfer of gift funds:
- A gift letter signed by both yourself and the donor which will need to be provided once we have gone to contract
- A bank statement from the donor showing that the balance is available on the day of transfer
- A copy of the gift check
- The deposit slip from the transfer
- A copy of the statement or the balance summary which shows the gift cleared your account
These are not uncommon pieces of documentation to be requested, in fact, they are standard when a portion or even all of the down payment funds have been given as a gift to the new homebuyer.