Rochester NY · Member since 2018 · 33 posts · 16 votes
Hey guys just some quick questions.
I am looking to buy my first duplex which I will rent out one unit and live in the other. I will be going for an FHA loan 3.5% down.
#1 - What I'm wondering is if I were to borrow money from a friend how would I be able to get a mortgage without the bank knowing that I have borrowed the money?
#2 - If I borrowed the money and had it deposited into my account how long would it need to sit there for the bank to say it's my money and not question where it came from? For all they know it's just mattress money.
Thanks
I am looking to buy my first duplex which I will rent out one unit and live in the other. I will be going for an FHA loan 3.5% down.
#1 - What I'm wondering is if I were to borrow money from a friend how would I be able to get a mortgage without the bank knowing that I have borrowed the money?
#2 - If I borrowed the money and had it deposited into my account how long would it need to sit there for the bank to say it's my money and not question where it came from? For all they know it's just mattress money.
Thanks
I'm not sure I'd advertise an attempt to commit mortgage fraud here.
Seabrook/Galveston · Member since 2018 · 274 posts · 178 votes
7y
How does it work if you have a business partner? I have a friend that wants to get involved, more so as an investor than actually putting in the sweat. He’s got $x he wants to invest, not as a loan to repay but as a way to get a percent of the monthly rental cash flow. How would that work?
Ofallon, MO · Member since 2018 · 21 posts · 6 votes
7y
@Frank Leone is there any chance your friend could joint venture with you and be a part of the entire process? Of course, I assume they would then be on all the paperwork attached to the house...at least until the two of you agreed he/she would be removed and you would assume full ownership. Essentially, they would be a co-applicant and co-Owner. Not sure if this is an option or makes sense to do.
Real Estate Agent · Garden City, NY · Member since 2016 · 3k+ posts · 1k+ votes
7y
@Bruce Cassidy
Partner is different because they will be on the mortgage and title.
This is separate from a person just giving you money with no ownership.
Vine Grove, KY · Member since 2016 · 19 posts · 19 votes
7y
@Frank Leone
The difference between receiving a gift and borrowing money from a friend is simple. There is no expectation that you repay the gift. However, if you borrow money from a friend (which is what your original post was asking about) there is an expectation that you will have to repay the debt.
This could affect your ability to repay your mortgage loan so the lender wants to know about these kind of debts. It also will impact your debt to income ratio which is a matrix that underwriters use to qualify your loan.
Not disclosing a debt on your application is a crime. Even if the money is “seasoned”.
If the money is a gift then the person that gave it to to you can sign a statement to that effect and the lender more than likely would allow you to use those funds towards your down payment.
Lender · Chicago, IL · Member since 2018 · 352 posts · 147 votes
7y
On FHA loans, is required 2 months bank statements but Freddie Mac HomePossible with 5% down on a multiunit require only 1 month bank statement. All deposits over 50% your monthly income need to be sourced, you can make some small deposits or yes you can use gift funds, bear in mind that most lenders will require proof money came from donor acct to you and that donor had the funds before he gifted, basically you cannot have a similar deposit few days before the transfer as we require a bank stm from the donor. However, gift funds can only come from a relative, and not all relatives qualify.... btw, often I have buyers that only bring the 3.5% downpayment and closing costs come from seller concession. The only way to bring slightly less than the 3.5% downpayment is to include the prorated taxes at the start at the file, that's the only credit that can be applied towards the downpayment.
Even though some of the people grilled you on your question, I am glad you asked it! I'm sure others with the same question will read this and learn why it's not allowed. I can't tell you how many times I get asked a similar question. It's reasonable to want to understand WHY the mortgage company is telling you no, and now you know the severity of lying on a mortgage application.
Also, the "mortgage rules" are not some hidden secret only the banks know. You are welcome to read Fannie/Freddie guidelines online. If you have questions, a good lender will be happy to help you.
Regarding Gift funds, get with your LO before you start moving money around. It will help alleviate some headache on both ends.