Down Payment Gift Guidelines for FHA and Conventional Mortgages - Information by Mortgage Biz of Florida

 

A larger down payment will most likely translate into little to no monthly mortgage insurance payment. However, coming up with a large down payment is an uphill task for most first-time homebuyers. Owning a home is a huge step in life, and you may find yourself seeking financial assistance for the down payment from your folks. It is possible to be gifted a portion of your down payment but there are specific guidelines to abide by.

 

Down Payment Gift Guidelines

 

In most cases, you can use a gift to cover all your down payment. If you’re applying for a FHA mortgage, the entire down payment can be a gift from a family member. The minimum down payment for a first-time home buyer FHA loan is 3.5%. The rules differ slightly when you are applying for a conventional loan like Freddie Mac or Fannie Mae.

 

Rules of the Down Payment Gift Letter

 

Generally, a form letter will be provided by your lender. You will fill out and sign the form, the following items below must be included on the letter:

 

  • Your name

 

  • Name and address of the person gifting you

 

  • Relationship with the person gifting you the down payment

 

  • Amount you’re gifted and its origin (statement of the account the funds will be gifted from)

 

  • Address of the place you’re purchasing

 

  • A concise explanation that the funds are a gift and not a loan

 

Tax Implications for Down Payment Gifts

 

You won’t incur any tax liability if you’re the one receiving a down payment gift. Yet, the one gifting you could be penalized if the amount they gift you surpasses the annual exclusion limit. For instance, married parents filing a joint return can gift up to $30,000 per kid this year (2018 Down Payment Gift Guidelines) without incurring the gift tax. We can provide you with a template down payment gift letter, just send us a message via email or the online chat on the bottom right of the screen.

 

Need more information about down payment gifts for home loans in Florida? Please get in touch with us by phone or add a comment below. When you are shopping for a mortgage for your new home, its important to understand all possible resources of income and assets you are able to use. Our job is to help you understand your options and advise on the best mortgage programs available. Another very important part of shopping for a mortgage is to be aware of closing cost. In fact, you could save thousands of dollars by working with a mortgage broker like Mortgage Biz of Florida. You save on processing fees, underwriting fees and appraisal cost.

 


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