How To Use A Gift On A Conventional Loan…

Did you realize that a borrower using a conventional mortgage, and putting down less than 20% – can use a gift for the entire down payment?

Many realtors and even loan officers believe that on a conventional loan the borrower can get a gift, but they must still have at least 5% of their own funds.

This is only true for second homes, or two to four unit principle residences.

…for a single family home there is no minimum contribution from the borrower’s own funds.

Here’s how to document it…

1) A gift letter that specifies…

a) Dollar amount of gift.

b) Date funds were transferred.

c) Donor’s statement that no repayment is expected.

d) Indicate donor’s name, address, telephone number and relationship to borrower.

2) The lender must verify that sufficient funds to cover the gift are in the donor’s account. Typically done with a current statement.

3) Copy of donor’s check and borrower’s deposit slip into borrower’s account.

If have additional questions on how to transfer the gift funds please email me or give me a call. …before you do the transfer!

That’s it for today!