Berkshire Hathaway EWM Realty.
Adelaida “Ady” M. Artime, P.A., Berkshire Hathaway EWM Realty.Phone: (786) 512-2467
Email: [email protected]

Using a gifted down payment to buy a home

by Adelaida “Ady” M. Artime, P.A. 11/10/2024

Potential homebuyers with generous connections may benefit from using gifted down payment funds. With a down payment gift letter, you can provide the money for a down payment to your mortgage lender even if it was obtained as a gift.

Here are some of the common questions and answers about payment gift rules in real estate:

What is a gifted down payment?

A down payment gift is when somebody contributes their own funds to help you afford a down payment for a mortgage. Mortgage lenders have specific rules about down payment gifts, including requirements for proving receipt of the funds.

Who can gift money for a mortgage down payment?

For conventional loans, acceptable gift funds must come from relatives. This includes parents, grandfathers, siblings, kids, fiancés and spouses. It can also include relatives via adoption or guardianship.

Other loans – such as those offered by the Federal Housing Administration – provide more freedom to give money as a gift. A down payment gift can also come directly from employers, unions, charitable organizations or other non-family members.

Why do lenders care about gift letters for mortgage down payments?

A gift letter is an official document proving the money for the down payment is actually a gift and not a loan. It must have information for both the giver and recipient, including contact information, source of funds and specific instruction for what the gift funds can be used for.

What about the tax implications of gift funds?

While you might not have to pay taxes on gift money, you may be required to declare it if it's over a certain amount. Any payment gift amount of $15,000 or more must be reported to the IRS.

Using gift money can be an excellent option for affording a down payment on a new home. As long as you follow the rules for your specific mortgage lender, a mortgage gift letter can be your ticket to home ownership.

About the Author
Author

Adelaida “Ady” M. Artime, P.A.

In her role as a real estate and relocation specialist in South Florida and Northern Virginia, Ady Artime prides herself on providing the highest level of service, confidentiality and professionalism to her clients. Based on her own experience as a government liaison, Ady is in familiar territory working with high powered individuals. She possesses a discreet and confidential work ethic, and her keen eye, attention to detail, and experience with multi-million dollar properties have earned her a high-profile, loyal clientele that expect the best from their realtor.

Known for her expertise and strong background in interior design, she stands out from other real estate agents. When a satisfied client says that Ady knows real estate "inside and out", the statement is to be taken literally. Over the course of her career, she has received recognition as an award-winning interior designer. She has designed and implemented interiors for countless luxury projects throughout the United States, and Europe. Her extensive knowledge of all facets of design, including working with architects and construction teams, led to a natural progression into the real estate arena and gives her a definite edge over the competition in serving her clients.

As and agent in South Florida and North Virginia, Ady lends her real estate expertise and design savvy to buyers and sellers. Ady's mission is to develop a faithful, repeat clientele by providing them with superior service and value. She is passionate about her work and takes the time to understand each client's needs and goals to accurately assess the options she provides. From overseeing the staging of a listed property in order to fetch the highest possible price to analyzing a potential purchase from a design and architectural perspective.