Many mortgage loan programs currently available allow borrowers to use present money from an approved donor, like a family member of close friend. But they also require the borrower to obtain a present letter from the person providing the funds. This model provides a basic template for a mortgage down payment present letter, along with a few sample verbiage you may use. Depending upon the kind of mortgage loan you’re using, the minimum required down payment might vary from 3% to 20% of the purchase price. That is a significant sum. The great news is that borrowers do not necessarily have to pay the whole thing out of their very own pockets.
The rules and requirements vary, depending on what kind of loan you’re using. The one thing they’ve in common is that most of the mortgage programs require the borrower to obtain a present letter. – Requirements for Mortgage Down Payment Gift Letters – Mortgage down payment present letters do not have to be complex or lengthy. They simply have to hit a few key points. Whilst the specific requirements can differ depending on loan program, there are several common ingredients. Required across the board. Firstly, the present letter should be written by the family member who’s providing the funds. That is an essential point.
The main purpose of the letter is for the donor to tell the lender that they’re giving the money freely and don’t expect any sort of repayment. So it must be written and signed by the individual who’s gifting funds to the borrower. At a minimum, a down payment present letter should include: The donor’s name, address, telephone number, and their relationship to you. The amount of cash they’re giving you. The date of the gift \/ donation. A statement verifying that they don’t expect repayment. Address of the home being purchased. The donor’s signature. Item .4 above is the most crucial item on the list.
The mortgage lender needs to make sure that the gifted funds are truly a present, and that they are not going to add to the existing debt load. But if it is a present that you do not have to repay, it’s not going to add to your overall debt. That is the primary purpose of the letter. Here is what the lender is worried about! They qualify you for a mortgage loan based on your current debt and income picture. They do that to ensure you can really afford your monthly installments, based on the amount of cash you earn and the amount you pay for your monthly debts. If a family member loans you several thousand dollars for your down payment and expects to be repaid, it could interfere with your capability to make your mortgage payments. Ask in advance: If you are planning to use down payment present money when purchasing a home, ask your mortgage lender about the specific requirements and guidelines in advance.