Often First Time Buyers rely on family to provide extra money for the purchase of a home in the form of a Gift.
In general, before using Gift money from family, I recommend you have a discussion with the Mortgage Loan Originator (MLO) who prequalified you. Depending on the Loan Program she used to qualify you, there may be restrictions on using Gift funds or there may be other requirements.
Gift funds, like all monies used in the purchase of a home, must be “sourced.” That is, your Lender will need to see the source of the Gift money from your family member. In most instances the Lender will also need to track the transfer of those funds from your family member into your bank account.
Again I caution: Speak with your MLO before using Gift monies for the purchase of a home.
A question that often comes up when Gift monies are involved is:
“What are the tax consequences of using
Gift money when buying a home?”
I’m happy to refer you to the website for my good friends at Burns & Rodriguez for professional guidance in this area from tax professionals:
http://www.brodtax.com/newsletter.php#6
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