Gift vs private money

3 Replies

Hi everyone
Another question for you guys
My lender told me that the down payment and closing costs have to be your own money they cannot be gifts. For the Down payment I was planning on using a loan from a family member. Would this be considered a gift if they gave me the lump sum and I was paying them back. How is it considered a private loan instead of a gift
Thanks in advance for any input

@Dan Desler a bank is likely going to want to see that the "gift" has been in your account for at least two months. A loan is typically not allowed since you are now in effect borrowing 100% of the purchase price. Banks want you to have your own money invested in the deal. 

I gave the same help to my brother for his home purchase. I had to fill out a gift form for the lender that stated that the money was given to him free and clear with no repayment.

As @Rob Beland stated, the lenders want to know you are invested in the property so you don't just walk away later, losing all of lender money and none of your own.