For many people, the most stressful or worrisome part of mortgage loans is the down payment. A standard home loan will come with a down payment requirement that may be up to 20 percent of the principal loan amount, and this can be a large sum for many buyers to raise.
At Primary Residential Mortgage, we’re here to help. Did you know that in most situations, it’s okay for you to get help with your down payment via a gift from parents or other family members? The rules here vary slightly between loan formats, but this is generally true across the board. Let’s look at the steps you have to follow if you’re going to do this.
Firstly, speak to a mortgage loan officer and confirm that the loan program you’re shooting for works with this kind of down payment gift. Also, ensure that you’re on top of any specific guidelines you have to follow for a particular loan type.
From here, your parents or another third party who is helping you out can provide you with the funds to put in your bank account. It’s best to get this money deposited right away – underwriters want to see copies of the bank statements that show when the deposit was made. Specific verification methods will vary between lenders and the type of loan used.
In an important next step, the third party must also provide written documentation to show that they do not expect any formal repayment. This is to ensure that the funds being used are truly a gift and not some type of loan meant to circumvent the normal rules.
Next, a third party underwriter will verify the down payment funds. They will look at bank statements and potentially at the sources of your funds. If the funds have been in your account for at least a month and can be easily traced back, you’ll have no issues.