Can a Mortgage Down Payment Be a Gift?

12-Oct

Can a Mortgage Down Payment Be a Gift?

When it comes to purchasing a home, it’s a big investment, no matter how wealthy you are. Often, first-time homebuyers need some additional down payment assistance to make the down payment on their home. That’s why Utah’s Home Savings Fund offers down payment grants for those in need. However, if you’re curious whether or not a financial gift might also be put toward your down payment, we’ve got all the facts for you.

Here you’ll find all of the information you need about whether it’s ok to use a monetary gift for your down payment.

Can I Receive a Gift to Make a Down Payment on My Home?

When making a down payment on your home, you can receive a financial gift to make the burden easier on you. However, there are some important rules you need to adhere to in terms of who you receive the gift from. For conventional loans, like that of a 30-year, fixed-rate mortgage, the gift giver must be a family member or relative. This includes a spouse, dependent, child, or anyone related to the homebuyer by legal guardianship, blood, marriage, or adoption.

For FHA loans, the terms are slightly more broad, allowing homebuyers to receive gifts for down payments can include friends, in addition to relatives, labor unions, employers, and charitable donations.

Can a Mortgage Down Payment Gift Be Paid Back?

A mortgage down payment “gift” means it can’t be paid back. It’s extremely important to make note of this because if the money is given with the intention of being reimbursed at some point, the lender will also need to factor that into your debt-to-income ratio. Withholding any information from your mortgage lender can result in heavy legal penalties, so it’s very important to be honest about where you’ve got the money for your down payment and whether it’s a gift, or simply a loan.

Contact us for more down payment assistance in Utah!

If you’re a first-time homebuyer in need of financial assistance, Home Savings Fund can help. We offer grants that do not need to be repaid that can be used in addition to government loans or grants for your down payment. To be eligible, you’ll need to be a US citizen, permanent resident, or have a work visa.

For more information about qualifications, contact us online or call (855) 369-7283.