Homeowner · Sussex County, NJ · Member since 2019 · 29 posts · 14 votes
I'm looking to purchase my first property in the very near future. (Duplex househack in North Jersey) I have 5% of the purchase price saved up + enough for closing costs, immediate repairs and reserves (roughly 5 months PITI).
Since the market is so competitive right now I was considering getting funds gifted from a family member, to increase my down payment (an extra 10% to get to 15% combined down) so that my offer would be more competitive. My questions are:
1. Is there a certain amount of time the funds need to be sitting in my account in order to use them towards a down payment?
2. What is the seasoning time period needed for funds in the donor's account?
3. Do these amounts of time vary from Conventional vs FHA?
Lender · Tampa, FL · Member since 2020 · 182 posts · 90 votes
5y
Hi Rob, the gift funds do not need to sit in your account for a certain period of time. They can be wired directly from the donor's account at closing or the gift donor can deposit them via check/wire (NOT CASH!) into your bank account. The lender will have you fill out a gift letter that states the amount of the gift and from what account number the funds came from. You can do this when you're under contract. You won't get denied due to a large deposit since it's a gift and it's traced.
Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
5y
@Robert McCormick as @Jeff Shumway stated you can use gifted funds and that should be disclosed. You do need to meet certain requirements. Page 10 of the below HUD document has a full list. In order for it to be considered a gift, there can be no expected or implied repayment required. This is to avoid family members loaning money under the pretense of gifting.
Consider yourself lucky that a family member is willing to gift that much money to you. Be very gracious for this. Most people do not have such opportunity. Good luck.
Thanks for sharing the HUD doc, I'll be sure to bookmark this so that when I find a property I can refer back to it. I do understand that the gift implies no re-payment what so ever and will be sure to make that crystal clear before I were to accept any type of gift.
I consider myself extremely fortunate to have a family member who would be so generous to even consider gifting any money at all. I'm not relying on these funds by any means, and my plan has always been to fund the deal myself. I would only seek out this option as a means of a competitive advantage in my high cost of living area to get started. Thanks for your response, I appreciate the feedback.