Financing in Grand Rapids>Question Details

Pete Bruinsma, Real Estate Pro in Grand Rapids, MI

Any way around seasoning a down payment?

Asked by Pete Bruinsma, Grand Rapids, MI Wed Oct 20, 2010

Buyer just received 20% down payment from parents. They will not issue a gift letter because the DP is to be considered a "loan," although there is no interest and no defined terms of repayment. Any way for buyer to move forward on an offer, with conventional 80% terms (no mi).

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The 20% from the parents either needs to be gift funds or seasoned in the buyers account for typically 60 days. The issue with a promissory note is combined loan to value (CLTV), most lenders will accept a maximum CLTV of 95%. With a promissory note that loan becomes a second on the home and is included in the CLTV calculation.
1 vote Thank Flag Link Wed May 18, 2011
If the parents are willing to put a promissory note in writting with the terms that should work. If they don't want to that and they won't do a gift letter, the funds need to be seasoned.
1 vote Thank Flag Link Wed Oct 20, 2010
Who will not issue the gift letter, the parents or the lender?
0 votes Thank Flag Link Wed Oct 20, 2010
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