How to receive a cash gift for downpayment

Tighter mortgage guidelines since late-2008 are forcing home buyers to make bigger downpayments.  Anecdotally, the change has led to a surge in buyers taking gifts of cash from family members.  If you’re among those accepting a cash gift from family, it’s important to know that you can’t just deposit the money in your bank account.  There is a proper way to accept a cash gift and it requires 3 distinct steps:

1. Complete and sign an acceptable gift letter
2. Document the gifter’s withdrawal of funds with teller receipts
3. Document the giftee’s deposit of funds with teller receipts

See, mortgage lenders pay close attention to gifts-for-downpayments.  For one, lenders have to make sure that downpayment cash is “clean” (i.e. not laundered).  And, secondly, they want the gift to really be a gift and not a loan-in-disguise.  This is why lenders will often require that a signed, dated letter accompany the home loan application.  As an example…

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Sincerely and respectfully,

Daniel A. Sosa

PMZ Mortgage Consultant

Office: 209-472-2010 x4716

Cell: 209-298-8017

Email: dsosa@pmzloans.com

Website: www.loanapproval411.com