Heloc or gift funds as down payment?

Question

I'm looking to get pre approved for a fha loan and I'm debating on how I want to finance the down payment and closing costs. My grandfather has a Heloc on his home which I have access to and permission to use the funds as a gift but I'm hesitant to do so since it's his money. I currently have a primary residence that I can get a heloc on but that means getting an additional credit inquiry and it adds to my DTI ratio. I'd like to get my own heloc so I can buy more properties in the future but I'm conflicted on what to do for now with the fha loan.

Any feedback or advice is appreciated.

Brent Coombs · Answer

@Aaron Moore, "permission to use the funds as a gift"? Well, if he's just going to GIVE you a gift, then ask - now!

But, if it's NOT actually a "gift", then - don't even think about deceiving your Lender about that!

If you're ever going to apply for your own HELOC, they'll either approve what you want, or, not.  Solved.

Meantime, you're struggling to save just 3.5% deposit? Are you really READY to buy again?

What are you intending to do with your current primary? (eg. Will renting it out help, or hurt, your DTI?)

Or, will it then be timely to SELL your home? Lots to consider. All the best...

Travis Dawson · Answer

I do believe that even with an FHA loan 100% of the down payment cannot be a gift. Talk to your lender for more details. You will also need your grandfather to sign a letter signifying that it is a gift and you don't have to pay him back.

Of course you could always season the money to avoid those problems.

Harjeet Bhatti · Answer

Get a gift from grandfather.