According to the National Association of REALTORS®, many of today's first-time home buyers use gifts from relatives to fund the down payment for a home purchase. However, lenders are carefully scrutinizing these gifts to ensure buyers are not getting a second loan.

Here are some steps for buyers to follow to make the use of a gift a smooth process:

• Plan ahead. Before applying for a mortgage, have the gift money deposited into your account to avoid too much scrutiny.

• Put it in writing. A gift letter written by the giver is a must for lenders. Be sure the letter states the money is a gift, the specific amount being given, the relationship to the borrower, and repayment is not required.

• Cash isn't always king. Lenders can be leary about cash gifts so it's best to have the money come in a check or wire transfer so that it’s traceable.

• Consider federal gift-tax regulations. Individual gifts of more than $13,000 must be reported to the IRS and are subject to tax.

• Know your loan product. Certain types of mortgages may limit how much of a down payment you can receive as a gift. An FHA loan for example, does not have a limit on gifts but conventional loans may have different requirements.

Like my tips? You'll love what I can do as your Realtor®. Don't forget, if you or someone you know is planning on buying or selling a home, give me a call and I'll make your home ownership dreams come true.

Kristy O'Connor
Realtor®
Weichert, Realtors - Media
606 E. Baltimore Pike, Media, PA
267.243.6434
KristyLOConnor@gmail.com