The gift should be fine since he will not be on the mortgage but I would consult with your lender. As for him taking a loan out to gift you this money, that will not work. Sounds like you are going FHA and if money is gifted to you the underwriter will want to see that persons bank statement showing that they have this money available.I just had a buyer whose mother gifted her the money for a down payment and she did a cash advance to get the funds and the underwriter denied the gift because it was not from her own funds, you could have different results with your lender. When you find a home you love and you have your minimum 3.5% down payment ask the seller to pay 6% in seller help it is a very standard practice and any Realtor will be able to help you in this matter. I hope this helps and best of luck to you.
- How to structure an offer so you get the full 6% from the seller to pay some closing costs
- Offering a "Lender Credit" to reduce those closing costs even more. What this means is, say I present you with a scenario with a rate of X. I can also show you a scenario with a higher rate, but also providing a generous "Lender Credit" to reduce those closing costs even more.
Keep in mind, it is FHA/HUD rules that you are invested in the home for the minimum 3.5% of your own documented funds. There is no way around that, so you would need to have atleast this much in your bank.
No portion of any down-payment can be made by a loan. The reason is, you can't borrower money so you can borrow more money.
Your fiancÃ© can 100% gift you the money, and it would be as simple as us getting a little documentation to show that you are engaged. This would help us with the "relationship" rule that HUD has.
I think I could help out with your scenario, so please reach out to me if you would like to chat!
Also, if you were looking at a home outside of the City of Pittsburgh, there is always the option of a USDA loan, which is NO down payment, and I can usually structure those so that there is little to no money needed for closing. There are actually some eligible areas just outside of city limits.
What happens if you donâ€™t get married? They get hit by a truck or crushed by a meteor? Do you intend to put them on title with you? All questions to ask your attorney before signing a 30 year obligation.
Anyway, here is the blub on this subject from FHAâ€™s handbook:
Provide a Gift
An outright gift of the cash investment is acceptable if the donor is
â€¢ the borrowerâ€™s relative
â€¢ the borrowerâ€™s employer or labor union
â€¢ a close friend with a clearly defined and documented interest in the
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Do you know her credit score. You may not have to over complicate things, FHA is a lot more lenient on credit than conventional. Also, if she can't go on the loan and your credit score is high enough, you can also go conventional and your mortgage insurance is much less!
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Generally a gift can't be borrowed; the lender will "source" the funds to see where they came from. The down payment definitely has to be real savings from past income. *Maybe* a gift from a loan is possible if the borrower is not the buyer and the agreement is not contingent on it; it's really up to the lender what they're willing to accept.
My main concern with you would be making sure you're really ready to buy. Home ownership comes with lots of new expenses; you're now fully responsible for *all* utilities, maintenance, repairs, etc. (Do you have a lawnmower?) You will probably need furniture, moving expenses, and so on.
Because of these expenses, you don't want to use *all* your savings on the house. You don't want to be completely broke after closing! Nor do you want to be right at your debt limit immediately. There will likely be some minor inspection issues you'd want to fix right away; if you neglect them, they can turn into bigger problems later.
Are you considering taxes, mortgage and homeowner's insurance in the mortgage payment? Hopefully it will still be less than your rent! You'll want to continue saving after the purchase, at least 1% a year, so that you have some reserves in case you need emergency repairs, maintenance, or other unexpected expenses. Careful budgeting and controlling expenses will be very important as you go through and adjust to this major life change.
Be sure you have adequate income and reserves to survive moderate adversity. This is how foreclosures happen: you exhaust all your savings and are at your debt limit after the purchase -- then the car breaks down, sombody gets laid off or sick, you miss a couple payments, and suddenly you're fighting to keep your new house.
Once you have some equity in the home, you can get a line of credit against the house as a form of insurance against sudden large expenses (better than putting it on a 20% credit card -- another way bankruptcies and foreclosures happen), but nothing beats good old-fashioned cash reserves.