Gift Fund (Part I)

You can always choose to use gift fund for your downpayment. Here is a list of general guidelines for regular conventional loans and FHA home loans. Remember, all banks have different guidelines. Their requirements can be slightly different from one bank to another.

Conventional Loans:

  • If your loan to value (loan amount divided by the purchase price) is less than or equal to 80%, you are allow to use up to 20% in gift fund for downpayment.
     
  • If your loan to value is over 80%, you are still allowed to use gift fund for your downpayment. However, a minimum of 5% of your purchase price must be your own fund. For example, if your purchase price is $100,000 and you are borrowing 85% in loan to value, you must put down at least $5,000 of your own fund. The rest of the down payment $10,000 can be a gift (Purchase Price $100,000 – Loan amount $85,000 – own fund $5,000)

 FHA Loans:
Since loan to value can be as high as 96.50% of your purchase price, the 3.5% downpayment can be all gifts (good news right?)

Now you know the general guidelines for gifts, here is what the banks will ask from you:

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