This Week in Real Estate: Down payment gifts and a new year’s resolution


By Ray “The Realtor” Kutylo
Signal Contributing Writer

Many people and families want to buy a home, but coming up with the down payment for a purchase is often a problem. One way people buy their first home is with the assistance of a down payment gift.

Isn’t this the gift you really want to give or get this year?

Gifts for a down payment complicate the home-buying process, and there are guidelines for making it all work.

First of all, lenders generally do not allow gifts to come from just anyone, or “suddenly appear.” Acceptable sources of gifts include family, domestic partners and significant others if engaged to be married.

Second, depending on the type of loan, there may be restrictions on the down payment gift. For example, if it’s conventional financing with 20 percent or more down, all of it can come as a gift. If it’s FHA financing, you will need to put in some portion of the down payment. FHA and VA loans have other restrictions based on your credit-worthiness and specific type of loan. For instance, minimum down FHA 3.5 percent down financing require all the funds to be from your own pocket, not from a gift.

Also, count on some documentation requirements by your home purchase lender. A letter of explanation of the gift that includes the name of the donor, their relationship to you, the date and amount of the gift and a statement that says the money is given with no expectation of repayment.

However, if the gift has been in your account for some months prior to getting a home loan, your lender may not need the documentation and verification of the source of the funds. Just know that when dealing with a lender, it’s always best to remember the other “Golden Rule” — those with the gold make the rules.

The important New Year’s Resolution. Have you decided to make your move this year, whether as a first-time or investment buyer, or as a home seller? It is never too early to consult with a trained and seasoned real estate professional about one of the largest lifestyle and financial decisions you will ever make.

Ray “the Realtor” Kutylo is the team leader of the SCV Home Team at Keller Williams VIP Properties. The Team brings experienced and professional service, commitment and value to every transaction, whether you are a home buyer or seller. Ray can be reached at (661) 312-9461 or by email at [email protected]. The views expressed are his own and not necessarily those of The Signal. CA DRE 00918855

Legal disclaimer: Based on information from the Southland Regional Association of REALTORS®/Multiple Listing Service for the week ending on 12/21/18. All data, including all measurements and calculations of area, is obtained from various sources and has not been, and will not be, verified by broker or MLS. All information should be independently reviewed and verified for accuracy. Properties may or may not be listed by the office/agent presenting the information.

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