All opinions are those of Michael Haigh or the Guest Blogger featured.
They do not necessarily reflect the opinions of W.J. Bradley Mortgage Capital, LLC

How To Receive A Cash Gift For Downpayment

Accepting gifts of cash for downpaymentsTighter mortgage guidelines since late-2008 are forcing home buyers to make bigger downpayments. Anecdotally, the change has led to a surge in buyers taking gifts of cash from family members.

If you’re among those accepting a cash gift from family, it’s important to know that you can’t just deposit the money in your bank account.

There is a proper way to accept a cash gift and it requires 3 distinct steps:

  1. Complete and sign an acceptable gift letter
  2. Document the gifter’s withdrawal of funds with teller receipts
  3. Document the giftee’s deposit of funds with teller receipts

See, mortgage lenders pay close attention to gifts-for-downpayments. For one, lenders have to make sure that downpayment cash is “clean” (i.e. not laundered). And, secondly, they want the gift to really be a gift and not a loan-in-disguise.

This is why lenders will often require that a signed, dated letter accompany the home loan application.

As an example:

I am the [relationship to recipient] of [name of recipient] and this letter serves as evidence that I am gifting [name of recipient] [amount of gift] to be used for the purchase of the home at [complete address of property].

This is a gift — not a loan — and there is no expectation of repayment.

[Signature of gifter]

To further appease lenders, gift recipients should make sure that gift funds are not commingled at the time of deposit. If the gift is for $12,000, for example, the bank’s deposit slip should indicate that a $12,000 deposit was made — nothing more, nothing less.

Don’t add a random $50 check to the deposit, in other words. If you have a separate deposit to make, make it as a subsequent transaction with its own receipt.

It’s also worth noting that gifting funds between family members can create both legal and tax liabilities. If you’re unsure about how donating or receiving a gift may impact you, call or email me directly. If I can’t help you with your questions, I can refer you to somebody that can.

Be Sociable, Share!

Related posts:

  1. The Right Way To Take A Cash Gift For Downpayment
  2. The Proper Way To Give And Receive Gifts For Downpayments
  3. FHA Cash Out Refinances Getting More Strict As Of April 1, 2009


Speak Your Mind

Tell us what you're thinking...
and oh, if you want a pic to show with your comment, go get a gravatar!

  • About the Team

    The Michael Haigh Team specializes in providing a professional, efficient and educational loan experience. We strive to find you the best real estate loan to suit your needs without putting you at risk—even if it's not from us! Our site will provide you with a plethora of information that will help you to figure out the loan process, answer your question, calculate the estimated value of your home, and calculate your estimated closing cost. On top of this you should check out our blog where we have frequent updates from Michael and other contributors on a multitude of topics related to mortgages.

    Backed by W.J. Bradley and Michael Haigh's notable history in the mortgage industry, The Michael Haigh Team is able to provide loan decisions much faster than large banks. Every aspect of your loan will be handled quickly and correctly so you know that nothing is left to chance. We're here to make this process as easy as possible for all parties involved and pride ourselves on making it right for every client. Contact us today to learn what we can do for you!

  • Michael Haigh Team

    1860 El Camino Real
    Suite 250
    Burlingame, CA 94010

    Privacy Policy
  • Web Analytics