{"id":13352,"date":"2020-04-29T06:13:33","date_gmt":"2020-04-29T12:13:33","guid":{"rendered":"https:\/\/www.richmondamerican.com\/blog\/?p=13352"},"modified":"2024-01-04T16:26:03","modified_gmt":"2024-01-04T23:26:03","slug":"can-my-family-help-me-finance-a-new-home","status":"publish","type":"post","link":"https:\/\/www.richmondamerican.com\/blog\/can-my-family-help-me-finance-a-new-home\/","title":{"rendered":"Can My Family Help Me Finance a New Home?"},"content":{"rendered":"\n<p><em>Homeownership is a very exciting\nprospect, but paying for a new house can be daunting. In this article, we share\nhow your family can contribute funds to help you take this important step!<\/em><\/p>\n\n\n\n<p>Being\nable to purchase a new home with financial assistance from your family is a\nwonderful opportunity. To help cultivate a positive relationship (and borrowing\nexperience), make sure to set clear expectations about gift funds at the onset and\ninform relatives that they will be required to share some personal financial\ninformation, including bank statements.<\/p>\n\n\n\n<p>Following are gifting guidelines for conventional, FHA and VA\nloans:<\/p>\n\n\n\n<hr class=\"wp-block-separator\"\/>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Conventional Loan<\/strong><\/h2>\n\n\n\n<p><\/p>\n\n\n\n<p>If a homebuyer is purchasing a primary residence, monetary gifts\nfrom relatives may be used for all or part of the funds needed for the\ntransaction. If the property will be a second home, the borrower must\ncontribute 5 percent of the down payment from his or her own funds. Any\nadditional funds needed for the transaction may come from a gift.<\/p>\n\n\n\n<p>The donor can be the borrower\u2019s spouse, child or other\ndependent; others related by blood, marriage, adoption or legal guardianship; or\nfianc\u00e9, fianc\u00e9e or domestic partner.&nbsp; If\nthe donor is a real estate agent and the gift is part of the commission on the\nspecific transaction, the gift may only be used to pay closing costs.<\/p>\n\n\n\n<p><em>Important to note: The\ndonor can\u2019t be affiliated with the builder, developer, real estate agent or any\nother interested party to the transaction unless there is a preceding\nrelationship as described above.<\/em><\/p>\n\n\n\n<p>Gifts must be evidenced by a letter signed by the donor\u2014called\na gift letter. The gift letter must:<\/p>\n\n\n\n<div style=\"display:flex; margin-bottom:30px;\">\n<div style=\"float:left; width:1%; background:#af272f;\">\n<\/div>\n<div style=\"float:left; width:99%; padding-left:15px;\">\n<ul>\n<li>Specify the dollar amount of the gift<\/li>\n<li>List the date the funds were transferred<\/li>\n<li>Include the donor\u2019s statement that no repayment is expected<\/li>\n<li>Indicate the donor\u2019s name, address, telephone number and relationship to the homebuyer<\/li>\n<\/ul>\n<\/div>\n<\/div>\n\n\n\n<p>When a gift from a live-in relative or domestic partner is\nbeing pooled with the borrower\u2019s funds to make the down payment, the following\nitems must also be included:<\/p>\n\n\n\n<div style=\"display:flex; margin-bottom:30px;\">\n<div style=\"float:left; width:1%; background:#af272f;\">\n<\/div>\n<div style=\"float:left; width:99%; padding-left:15px;\">\n<ul>\n<li>A certification from the donor stating that he or she has lived with the borrower for the past 12 months and will continue to do so in the new residence<\/li>\n<li>Documents that demonstrate a history of borrower and donor shared residency. The donor\u2019s address must be the same as the borrower\u2019s address. Examples include but are not limited to: a copy of a driver\u2019s license, a bill or a bank statement.<\/li>\n<\/ul>\n<\/div>\n<\/div>\n\n\n\n<p>The donor must provide documentation that sufficient funds\nto cover the gift are either in the donor\u2019s account or have been transferred to\nthe borrower\u2019s account. Acceptable documentation includes any one of the\nfollowing:<\/p>\n\n\n\n<div style=\"display:flex; margin-bottom:30px;\">\n<div style=\"float:left; width:1%; background:#af272f;\">\n<\/div>\n<div style=\"float:left; width:99%; padding-left:15px;\">\n<ul>\n<li>A copy of the donor\u2019s check and the borrower\u2019s deposit slip<\/li>\n<li>A copy of the donor\u2019s withdrawal slip and the borrower\u2019s deposit slip<\/li>\n<li>A copy of the donor\u2019s check to the closing agent<\/li>\n<li>A settlement statement showing receipt of the donor\u2019s check<\/li>\n<\/ul>\n<\/div>\n<\/div>\n\n\n\n<p>When the funds are not transferred prior to settlement, the\ngift funds must be given to the closing agent in the form of a certified check,\ncashier\u2019s check or other official check.<\/p>\n\n\n\n<hr class=\"wp-block-separator\"\/>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>FHA Loan<\/strong><\/h2>\n\n\n\n<p><\/p>\n\n\n\n<p>Gifts may be provided by: <\/p>\n\n\n\n<div style=\"display:flex; margin-bottom:30px;\">\n<div style=\"float:left; width:1%; background:#af272f;\">\n<\/div>\n<div style=\"float:left; width:99%; padding-left:15px;\">\n<ul>\n<li>A family member<\/li>\n<li>A close friend with a clearly defined and documented interest in the borrower<\/li>\n<\/ul>\n<\/div>\n<\/div>\n\n\n\n<p>Gifts cannot come from the property seller or any person who\nfinancially benefits\u2014directly or indirectly\u2014from the transaction or anyone who\nis or will be reimbursed\u2014directly or indirectly\u2014by the seller or a person who\nbenefits financially from the transaction.<\/p>\n\n\n\n<p>Donor\u2019s funds must be in a bank account. Cash on hand is not\nan acceptable source of donor gift funds. <\/p>\n\n\n\n<p>A gift letter is required and must include the following\ninformation:<\/p>\n\n\n\n<div style=\"display:flex; margin-bottom:30px;\">\n<div style=\"float:left; width:1%; background:#af272f;\">\n<\/div>\n<div style=\"float:left; width:99%; padding-left:15px;\">\n<ul>\n<li>The donor\u2019s name, address and telephone number<\/li>\n<li>The donor\u2019s relationship to the borrower<\/li>\n<li>The dollar amount of the gift<\/li>\n<li>A statement that no repayment is required<\/li>\n<\/ul>\n<\/div>\n<\/div>\n\n\n\n<p>Documenting the Transfer of Gifts<\/p>\n\n\n\n<p>If the gift funds have been deposited into the borrower\u2019s\naccount, a copy of the donor\u2019s bank statement showing the withdrawal and a copy\nof the borrower\u2019s bank statement showing the deposit into the borrower\u2019s\naccount will be needed.&nbsp; <\/p>\n\n\n\n<p>If the gift funds are not verified in the borrower\u2019s\naccount, a copy of the certified check, money order, cashier\u2019s check, wire\ntransfer or other official check evidencing payment to the borrower or\nsettlement agent and the donor\u2019s bank statement evidencing sufficient funds for\nthe amount of the gift will be needed.&nbsp; <\/p>\n\n\n\n<p>If the gift funds are being borrowed by the donor, and\ndocumentation from the bank or other savings account is not available, the\ndonor must provide written evidence that the funds were borrowed from a\npermissible source\u2014not from a party to the transaction.<\/p>\n\n\n\n<p>Regardless of when gift funds are made available to a borrower\nor settlement agent, the gift funds must be provided by a permissible source.<\/p>\n\n\n\n<hr class=\"wp-block-separator\"\/>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>VA Loan<\/strong><\/h2>\n\n\n\n<p><\/p>\n\n\n\n<p>Gift funds can\nalso be used with VA financing, providing the donor does not have any\naffiliation with the builder, developer, real estate agent or any other\ninterested party to the transaction. A gift letter must: <\/p>\n\n\n\n<div style=\"display:flex; margin-bottom:30px;\">\n<div style=\"float:left; width:1%; background:#af272f;\">\n<\/div>\n<div style=\"float:left; width:99%; padding-left:15px;\">\n<ul>\n<li>Specify the dollar amount of the gift<\/li>\n<li>Include the donor&#8217;s statement that no repayment is expected<\/li>\n<li>Indicate the donor&#8217;s name, address, telephone number and relationship to the borrower<\/li>\n<\/ul>\n<\/div>\n<\/div>\n\n\n\n<p>The funds to cover the gift must have been transferred to the\nborrower&#8217;s account or be received by the closing agent at the time of closing.<\/p>\n\n\n\n<p>Acceptable documentation includes any one the following:<\/p>\n\n\n\n<div style=\"display:flex; margin-bottom:30px;\">\n<div style=\"float:left; width:1%; background:#af272f;\">\n<\/div>\n<div style=\"float:left; width:99%; padding-left:15px;\">\n<ul>\n<li>Evidence of the borrower&#8217;s deposit<\/li>\n<li>A copy of the donor&#8217;s funds by check\/electronic transfer to the closing agent<\/li>\n<li>The Closing Disclosure showing receipt of the donor&#8217;s funds<\/li>\n<\/ul>\n<\/div>\n<\/div>\n\n\n\n<p> All in all, it\u2019s great to have family support during the homebuying journey\u2014whether that is financial, logistical, emotional or a combination of the three. Setting clear parameters from the beginning can help ease the process. We hope these tips have been useful! Explore other <a href=\"https:\/\/www.richmondamerican.com\/blog\/tag\/financing\/\" target=\"_blank\" rel=\"noreferrer noopener\" aria-label=\" (opens in a new tab)\">financing articles<\/a>. <\/p>\n","protected":false},"excerpt":{"rendered":"<p>Homeownership is a very exciting prospect, but paying for a new house can be daunting. In this article, we share how your family can contribute funds to help you take this important step! Being able to purchase a new home with financial assistance from your family is a wonderful opportunity. To help cultivate a positive [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":13353,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"inline_featured_image":false,"ub_ctt_via":"","cybocfi_hide_featured_image":"","footnotes":""},"categories":[4],"tags":[382,150,206,279],"featured_image_src":"https:\/\/www.richmondamerican.com\/blog\/wp-content\/uploads\/2020\/04\/family-finance.jpg","author_info":{"display_name":"rahblogadmin","author_link":"https:\/\/www.richmondamerican.com\/blog\/author\/rahblogadmin\/"},"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v22.4 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\r\n<title>Can My Family Help Me Finance a New Home?<\/title>\r\n<meta name=\"description\" content=\"Homeownership is an exciting prospect. 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