If you are planning to buy a house and need some extra cash for the down payment, you may be wondering if you can use money gifts from family and friends. The answer is yes, but there are some rules and requirements you need to follow. Here are some tips on how to use gift money for your down payment:
You will need to provide a gift letter from the donor that states their name, relationship to you, address, phone number, and the amount and purpose of the gift. The letter should also state that the gift is not a loan and does not need to be repaid.
You will need to provide bank statements that show the deposit of the gift money and the balance of your account. You may also need to provide a paper trail of the gift money, such as a check or a wire transfer receipt.
Depending on the amount and source of the gift money, you or the donor may have to pay taxes on it. The IRS has an annual gift tax exclusion that allows you to give or receive up to $15,000 per person per year without paying taxes. Anything above that amount may be subject to taxes. You should consult with a tax professional before using gift money for your down payment.
Using gift money for your down payment can be a great way to boost your home buying power and reduce your mortgage costs. However, you need to be careful and follow the rules and regulations to avoid any problems or delays with your loan approval. If you have any questions or concerns about using gift money for your down payment, you should talk to your lender or a real estate agent.
We hope this article was of value to you. For more great tips, bookmark our site and for all your mortgage needs, visit the A Team at TMFFMS.
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