Mortgage FAQ: Do I Need to Disclose a Financial Gift Before Buying a Home?

"I’M GETTING READY TO BUY MY FIRST HOME AND MY PARENTS HAVE OFFERED TO HELP BY GIVING ME MONEY FOR PART OF THE DOWN PAYMENT. WILL I NEED TO DISCLOSE THIS MONEY?"

Yes, you’ll need to disclose any large cash gifts that you receive or else your loan may be denied. You can disclose the money by having your parents write what is called a gift letter. The gift letter will need to have the amount of the gift, the relationship of the gifter to the giftee, the address of the property you’re buying, and a notation that the gift is actually a gift and not a loan. You will then give the gift letter to your lender along with the other documentation that your lender will require to process your loan.

You—and your parents—will also need to make sure that there is a solid paper trail of documentation for the cash gift. There may be other lender-specific requirements for disclosing a cash gift—such as the maximum amount you can received without a gift letter being required—so make sure to check with your lender well ahead of time. Even if the money your parents are giving you isn’t specifically for your down payment (or for closing costs) you will still need to provide your lender with a gift letter because they will want to see documentation and verification of all of your assets, including any cash gifts.

For more than 25 years, Omega Financial has been serving mortgage clients in Massachusetts. Our brokers have approximately 50 years in the mortgage business. You always will receive fast, courteous, and accurate information. Omega Financial, Inc. is a company duly licensed to operate in Massachusetts as a Mortgage Brokerage. We are located in the Town of Norwood, Massachusetts where we have been operating as Omega Financial Incorporated since 1988.

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