Gift Funds And Mortgage Financing - Information From American Financial Resources
Giving the gift of home ownership can truly change the life of a loved one, allowing him or her to buy a home years earlier than might be possible if saving the money required for a down payment. Many mortgage programs allow the use of gift funds for purchasing real estate.
How To Use A Gift For A Home Purchase
Gift funds to be used as all or part of a down payment can come from just about anywhere, but commonly come from close family members such as parents or grandparents. Giving such a gift can be a part of estate planning, as well as a huge help to the beneficiary. Discuss the details of your situation with your financial planner or tax professional. The guidelines of some mortgage programs will have requirements concerning how gift funds can be used. For example they may only allow a certain percentage of the purchase price to come from a gift, or specify how the gift must be documented. In most cases the lender will ask for a "gift letter" detailing the amount of the gift funds, who they were given by, who received them, and including a statement that the gift is not required to be paid back. Without that statement the gift could be viewed as a loan which would need to be considered an outstanding liability.
It is important to consider the tax implications of giving and accepting a cash gift. In many cases a certain amount can be given each year tax free. Check with your tax professional for details.
Learn More About Buying A Home With A Gift
For additional information on gift funds or any other aspect of buying or financing a home contact an American Financial Resources loan consultant at 800-316-9508. Our staff is made up of financial experts who truly care about their customers. If you would like to know what today's mortgage rates are for purchasing a new home simply fill out our rate quote request form. You can also get started online quickly and easily.
Last Updated: June 15th, 2010 3:16 PM CDT