Blogging About Loans: Rules on Gifts Vary by Program

An office of elite mortgage lending professionals with a common interest and goal focused on providing customer service that exceeds expectation. Thereby building our business from repeat and referral opportunities. Ruth Vogt. LMB 100023827. NMLS 257576. Regulated by the Division of Real Estate. Fairway Independent Mortgage is an Equal Housing Opportunity.

Rules on Gifts Vary by Program

Many states, such as Colorado, offer down payment assistance programs, or even county bond programs, such as the El Paso County Bond program. But sometimes a family member is interested in gifting you down payment money. It's important to understand the guidelines of a gift for down payment will vary by the financing vehicle you choose.

Below is a comparison chart to help you make your decision on which is best for you.

Agency

Acceptable Donor

Guideline Specifics

Fannie

 

B3-4.3-04

  • A relative, defined as the borrower’s spouse, child, or other dependent, or any individual who is related to the borrower by blood, marriage, adoption, or legal guardianship;
  • Fiancéor fiancé or domestic partner
  • The donor may not be, or have any affiliation with, the builder, the developer, the real estate agent, or any other interested party to the transaction.

 

  • Primary and second home purchase only
  • Not considered an Interested Party Contribution
  • Gift letter required
  • Minimum borrower investment of 5% is required for second home if LTV is >80%.

Freddie

5501.3

  • A relative, defined as the borrower’s spouse, child, or other dependent, or any individual who is related to the borrower by blood, marriage, adoption, or legal guardianship;
  • Fiancé or fiancée or domestic partner
  • Primary and second home purchase only
  • Not considered an Interested Party Contribution if the seller is not, nor has any affiliation with, an interested party
  • Gift letter required
  • Minimum borrower investment of 5% is required for second home if LTV is >80%.

FHA

4000.1, II, A, 2, b, ii, (A)

4000.1, II, A, 4, d, iii, (F)

Family member defined as

  • child, foster child, parent, or grandparent;
  • spouse or domestic partner;
  • legally adopted son or daughter, including a child who is placed with the borrower by an authorized agency for legal adoption;
  • brother, stepbrother, sister, stepsister;
  • uncle or aunt
  • son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law of the borrower.

Limited to 85% LTV unless:

  • Residence is currently selling-family member's primary residence, or
  • Purchasing family member has been renting residence 6 months prior to sales contrac date.
  • Gift letter is required.

 VA

Details on VA loans

 No specific guidelines

 Would be subject to the 4% seller contribution limit and may be considered an inducement to purchase.

USDA

3555, 9.3, E

n/a

Gifts may not come from the seller.

 

For more information on Colorado Home Loan options, contact me. Or call a local lender licensed in your area.

 

*Chart provided courtesy of and with permission from MortgageCurrentcy.com


Opinions expressed here are the sole responsibility of the author, and do not necessarily reflect the view of Fairway Independent Mortgage.

Ruth Vogt Colorado Mortgage Lender Ruth Vogt, Sales Manager

 #LMB100023827, NMLSR# 257576

 Equal Housing Opportunity. 

 Regulated by the Division of Real Estate.

   www.ColoradoHomeLender.com

   ruthv@fairwaymc.com  303-881-7849.

 

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Comment balloon 0 commentsRuth Vogt • June 26 2017 06:34PM

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