Check Out The New Guidelines For Gifting On Conventional Loans...

Good Morning!



If you wanted a Conventional Loan, and you were thinking of trying to use a gift for down payment or to help with closing costs - here are some guidelines you need to be aware of...



The gift can only be provided by...



A relative, defined as the borrower's spouse, child, or other dependent, or by any other individual who is related to the borrower by blood, marriage, adoption, or legal guardianship; or a fiancé, fiancée, or domestic partner.



Amount of gift...



If loan to value ratio is 80% or less (putting down at least 20%) then entire down payment can be a gift! This would be on owner occupied 1 to 4 family homes.



If loan to value ratio is 80% or higher then entire down payment can be a gift! ...This would apply to a one unit principal residence.



If buying a 2 to 4 unit home and the LTV is over 80% then 5% of the down payment must come from borrower's own funds. The remaining funds can come from a gift for additional down or help with closing costs or reserves.



Documentation Requirements for a gift...



Gifts must be evidenced by a letter signed by the donor, called a gift letter. The gift letter must:



· specify the dollar amount of the gift;

· specify the date the funds were transferred;

· include the donor's statement that no repayment is expected; and

· indicate the donor's name, address, telephone number, and relationship to the borrower.



Remember the main benefit of using a Conventional Loan over FHA is that there is no upfront mortgage insurance payment!



I hope you have a great day! Thanks for reading!



Brett