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Your down payment can be in the form of a gift if you meet certain loan guidelines


The hardest part of purchasing a home for most first time home buyers is coming up with the down payment, learn how a gift can be a source for your partial or full down payment amount.

Heading into the peak of home buying season usually means that first time home buyers are abundant in the marketplace. There may have never been a better time to purchase a new home for a first time home buyer as home prices drop and mortgage rates remain very attractive. For most first time home buyers finding the means to have a down payment is often the most difficult chore. There are different guidelines that a borrower must follow if they are receiving money for their down payment in the form of a gift.

Most first time buyers are working with a minimal down payment. On a conventional mortgage loan a borrower is required to have five percent of their own money into the transaction. If they meet this criteria they would be eligible for a gift equal to five percent. If they have ten percent or more into the transaction then their gift could also be ten percent or more. If a borrower is receiving a gift of twenty percent or higher, this can be considered a gift of equity if they are buying a home from an immediately relative who is providing the gift.

FHA loans are another alternative that is popular with first time home buyers. With an FHA loan the borrower is required to have a three percent down payment, of which all could be in the form of a gift. This is a very popular financing method for first time home buyers who can even arrange to have the seller contribute to their down payment as a form of a gift through a non profit organization. FHA loans may provide the best opportunity for a home buyer to qualify with the least amount of money required into the transaction to be of their own funds.

7-3 2008 ? LoanNetwork.com





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