Can I gift money if I am not on the loan?

Asked by Michelle, Fairfield, CA Wed May 28, 2008

Hi, my boyfriend and I are purchasing our first home and he is the only one on the loan since he has a phenominal credit history. We are both going to be on title so I was wondering if I could "gift" him or give him money towards buying the home. I was wondering if anyone knows how that works. We both have the money; except that mine are tied up in stocks that I am going to sell to cover the closing costs. Is this possible?

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, ,
Sun Aug 31, 2008
Michelle - more than likely you should be able to do this, there are some exceptions regarding sourcing for these funds, they don't always have to come from a direct relative. I can also help advise you regarding your options for selling stock to as I'm formerly a registered representative.

I would also strongly advise you to fully consider your options regarding titling. Though having you added to the home's title can be seen as an act of good faith, it can also create unintended issues for you. For a quick example, you won't get credit for the mortgage payments, but the mortgage will be counted as your debt should you want to purchase another home using your credit.

Feel free to contact me with any further questions!

thanks, Jeff Marr
Stanford Mortgage
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Debt Free Da…, , 85260
Wed May 28, 2008
Because he is just a relative you wont be able to use gift money. If must come from a family member or relative.
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Neil & Ronnie…, Agent, Las Vegas, NV
Wed May 28, 2008
That is a question that is best answered by your boyfriend's lender. It really depends on the type of loan he is getting. Some loans allow for gift funds and others do not. You did not mention if your gift money was needed in order to qualify or close the transaction. Your boyfriend should consult with the lender as to if this can be done & how.
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Cathy Sloan, Agent, Jacksonville, FL
Wed May 28, 2008

Actually, you need to talk with your boyfriend's mortgage company and ask their advice. Many types of loans do not allow you to gift funds unless you are a direct relative such as parent, sibling, grand parent, aunt, or uncle.

I just had this same scenario on a FHA loan in April. The girlfriend could not gift funds even though she was going to be on the title and the significant other could not qualify on a conventional loan. They had to go into and American Family Fund program.
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Don Tepper, Agent, Burke, VA
Wed May 28, 2008
Sure. Check with a CPA for the right process to follow. And a lawyer as well to protect your interests. I'm not a lawyer, so this isn't legal advice. But you may want to set it up similar to an equity share arrangement. For instance, if you two at some point split up, there should be an equitable way to dispose of the property and for you to recover your contribution to it. A land trust would be a good vehicle to handle that.

Consult a CPA before selling the stock. You may want to sell a combination of appreciated and depreciated stock so that there isn't a tax consequence. Or, if you're facing gains on other stock, you just may want to sell some that's gone down in value. Again, a CPA can advise you; it depends on your particular circumstances, other income, and so on.

Hope that helps.
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