Are you one of those lucky people who have family with money to spare? AND they said they’d help you with your down payment and funds to close? Will they adopt me?
If you’re one of the lucky ones, there are easy ways and hard ways to get and document gift funds.
have the kind and generous person who is giving you the gift wire those funds directly to the title company. Don’t pass Go, don’t collect $200, don’t let those funds go into your own account. Your lender can provide you the wire instructions to the title company and it’s as simple as your kind, generous family member going into their bank with those instructions and saying “send this much money here”.
On a Conventional loan, the only other thing a lender will need in this situation is a completed and signed gift letter. Your generous donor will have to sign that letter too. It asks for bank information and that information needs to match the bank account the funds are going to be wired from.
On a Government loan (FHA, VA, USDA) there’s a little more documentation that will be needed – the gift letter AND the lender is going to require all pages of a bank statement from the person giving you the gift as well as a transaction history from that statement date through to the date the wire left their account to show the wire leaving their account and the balance in the account after the wire has been withdrawn.
If your generous donor is averse to this easy way and, if at all possible, if you know that this scenario is coming, what I recommend is that you get this gift from your donor when they tell you they’re going to give it. Say at Christmas drunk Uncle Rick offers to help with the down payment – get the funds right then, even if you’re not buying until March, and deposit them into AN account and just let it sit there until you are ready to buy. When funds are in your account for 60 days, they’re considered “seasoned” which means we don’t have to show where they came from. So it can still *technically* be a gift but we don’t have to document them as such for your home loan transaction.
Let’s say you have a generous, luddite, donor who doesn’t want to wire the funds, they want to give you a check or transfer the funds directly into your own account (maybe you bank at the same bank). Here’s what’s needed for that:
A copy of the check
Proof of deposit of the check into your bank account
A transaction history showing the check/transfer being deposited and the balance in your account after the check/transfer is deposited
A bank statement from the donor showing that they have the funds to give in their account. The statement has to be for the account that the gift check/transfer came from.
Government loans (FHA, VA, USDA) will require documentation from the donor showing the funds being withdrawn from their account.