Using Gift Money For Your Down Payment


Ask Carolyn Warren

kitchen counter top view No money for a down payment? If you have a family member who is willing and able to give you the funds for a down payment, you may be in luck! Here’s how it works.

Who Is Allowed to Gift Money

Gift money may come from a family member. Some lenders will stretch that to include a fiance/fiancee. Friends are not allowed to gift the down payment. Why? Because lenders believe that your parents, a grandparent, or even a brother or sister would give you cash without expecting it to be returned. But a friend? No, lenders don’t think friendship stretches that far, and that it would actually be a secret loan. Remember, borrowed money cannot be used for a down payment.

What the Gifter Has to Prove

Lenders have a form Gift Letter that the person donating the funds must fill out and sign. In addition, they have to…

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