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| Down Payment To Buy A Home |
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Buying a house is a stressful occasion.
Besides the price of the house, you have to
think of the down payment and the closing
costs. The bigger the down payment, the
better your mortgage rate. "How much house
can I afford?" is the question.
But let's say that you and your spouse are
paying $2,500 a month in rent. Employment is
good and you have been paying this rent for
over 3 years.
You find it hard to save the down payment for a
house. Every time you get a little nest egg,
there is an emergency. You can qualify for a
loan because both you and you spouse have
excellent credit. Your problem is the house
down payment.
A family member can help with the house
down payment. It has to be a 'real gift' and not
a loan. Equally important, the person gifting
must be an immediate family member, not a
third cousin that you never met.
To document the transaction and to make it
legal, you should get a letter from the family
member. The letter should cover the following.
1. The amount of money gifted.
2. Specify that it is a gift and no repayment is
required.
3. Proof of the money actually changing hands.
Provide a copy of the banks statement
showing the money in the account.
4. State the relationship of the borrower to the
family member gifting the money. The common
relationships are parents, brother, sister, uncle
and aunt. Include the relative's address and
phone number.
5. The letter should also state the purpose of
the gift, specifically, to purchase a house.
Sample gift letter.
January 31, 2010
To Whom It May Concern:
I am giving my sister, Kim Garnett, the sum of
Ten Thousand Dollars ($10,000.00) to be use
towards the purchase of her house. This
money is a gift and does not have to be repaid.
For additional details please contact the
undersigned at the information listed below.
James Garnett
123 Brad Street
Austin, Texas
75012
Tel: 854-123-4567
Besides the price of the house, you have to
think of the down payment and the closing
costs. The bigger the down payment, the
better your mortgage rate. "How much house
can I afford?" is the question.
But let's say that you and your spouse are
paying $2,500 a month in rent. Employment is
good and you have been paying this rent for
over 3 years.
You find it hard to save the down payment for a
house. Every time you get a little nest egg,
there is an emergency. You can qualify for a
loan because both you and you spouse have
excellent credit. Your problem is the house
down payment.
A family member can help with the house
down payment. It has to be a 'real gift' and not
a loan. Equally important, the person gifting
must be an immediate family member, not a
third cousin that you never met.
To document the transaction and to make it
legal, you should get a letter from the family
member. The letter should cover the following.
1. The amount of money gifted.
2. Specify that it is a gift and no repayment is
required.
3. Proof of the money actually changing hands.
Provide a copy of the banks statement
showing the money in the account.
4. State the relationship of the borrower to the
family member gifting the money. The common
relationships are parents, brother, sister, uncle
and aunt. Include the relative's address and
phone number.
5. The letter should also state the purpose of
the gift, specifically, to purchase a house.
Sample gift letter.
January 31, 2010
To Whom It May Concern:
I am giving my sister, Kim Garnett, the sum of
Ten Thousand Dollars ($10,000.00) to be use
towards the purchase of her house. This
money is a gift and does not have to be repaid.
For additional details please contact the
undersigned at the information listed below.
James Garnett
123 Brad Street
Austin, Texas
75012
Tel: 854-123-4567
Gifted Down
Payment From
Family Members
Payment From
Family Members
Get A Down
Payment To Buy
A House: HUD
Helps
Payment To Buy
A House: HUD
Helps
| Facts About Down Payment Gift Assistance Programs Potential homebuyers must qualify for a mortgage that allows gift funds. Buyers do not have income limitations - no minimums or maximums. Some programs set a limit on the sales price of the house. Down payment assistance usually tops out at 7% of the final sales price. Funds can be used for the down payment and/or the closing costs. Eligible houses can be new or existing. There is usually a cap on the sales price. Any unused funds must be returned to the gift program. The funds can not be used to refinance an existing loan or to renovate a house. Sellers can not use the gift as a charitable deduction. In other words, there are no tax write offs for the seller. A formal, legitimate appraisal is required. This is the only way the value of the house can be established. The borrower does not have to repay the gifted funds or the grant. Sellers are not allowed to give home buyers down payment funds. |
The American Dream Down Payment
Initiative (ADDI) is offered by the U.S.
Department of Housing and Urban
Development (HUD). The program helps low
and moderate income families with down
payment assistance when they are
purchasing a home. ADDI was signed into
law on December 16, 2003.
HUD also offers down payment assistance
through state and local government
programs. What you should know about
these programs is that not all lenders
participate. There is a lot of paperwork
involved and many loan originator simply
can't be bothered. So be careful. A lender
might entice you with a great rate, but if the
bank doesn't offer ADDI, you might be
switched to a loan that is less attractive.
The ADDI program is only available to you if
you plan on getting an FHA loan. To qualify
you must be a first time home buyer. For the
purposes of the ADDI program a first time is
some one, or the spouse, who didn't own a
house in the last 3 years. In addition, your
income can not be more than 80 percent of
the median income of the area you plan on
purchasing the house. Finally the assistance
is capped at 6 percent of the purchase price
of the house. A good feature of the program
is that the money can also be used for
closing costs and certain rehab costs. An
example of a rehab cost would be building a
wheel chair ramp.
To find the median income for your area you
can go to the website: efanniemae.com.
States and local housing authorities are
heavily involved in down payment
assistance program. They have a vested
interest in obtaining more housing for its
citizens. More housing equals more property
taxes equals more revenue. Each year HUD
contributes money to state and local
governments for down payment assistance.
Each government entity is different so you
have to contact your local agencies. There
will definitely be a residency requirement.
Be prepared to wait when using the ADDI
program. This is not for a quick close!
Initiative (ADDI) is offered by the U.S.
Department of Housing and Urban
Development (HUD). The program helps low
and moderate income families with down
payment assistance when they are
purchasing a home. ADDI was signed into
law on December 16, 2003.
HUD also offers down payment assistance
through state and local government
programs. What you should know about
these programs is that not all lenders
participate. There is a lot of paperwork
involved and many loan originator simply
can't be bothered. So be careful. A lender
might entice you with a great rate, but if the
bank doesn't offer ADDI, you might be
switched to a loan that is less attractive.
The ADDI program is only available to you if
you plan on getting an FHA loan. To qualify
you must be a first time home buyer. For the
purposes of the ADDI program a first time is
some one, or the spouse, who didn't own a
house in the last 3 years. In addition, your
income can not be more than 80 percent of
the median income of the area you plan on
purchasing the house. Finally the assistance
is capped at 6 percent of the purchase price
of the house. A good feature of the program
is that the money can also be used for
closing costs and certain rehab costs. An
example of a rehab cost would be building a
wheel chair ramp.
To find the median income for your area you
can go to the website: efanniemae.com.
States and local housing authorities are
heavily involved in down payment
assistance program. They have a vested
interest in obtaining more housing for its
citizens. More housing equals more property
taxes equals more revenue. Each year HUD
contributes money to state and local
governments for down payment assistance.
Each government entity is different so you
have to contact your local agencies. There
will definitely be a residency requirement.
Be prepared to wait when using the ADDI
program. This is not for a quick close!
Family should help if they have the money.
HUD will help you buy a house - ADDI
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| Buying A House? Get A Down Payment In many cases homeownership is only a down payment away. There are qualified buyers without a down payment. They sit on the sidelines and wait until next year. But next year never comes. There are ways to get a down payment to buy that house you always wanted. However, when you do get the money, make sure you put it in your bank account. Let it stay there for at least 90 days before you purchase the property. Bankers get a bit spooky when they see a lot of deposit activity leading up to the purchase. They imagine all sorts of "illegal stuff". Did the money come from a loan shark? Did you borrow the money? Watch the slideshow. |
