Down payment gifts or gifting.

Mortgage lenders would prefer homebuyers to have enough money available to make a down payment of between 10 to 20 percent of the home's purchase price. If however, you cannot come up with a down payment of any size, there are programs available which require ZERO or no down payment. Borrowers should understand that higher interest rates will accompany no down payment mortgages, because the lender is assuming more risk when they're financing 100% of the purchase price.

While there can be some exceptions made, qualifying for a zero down mortgage usually requires a midscore FICO of 580... in some cases, a borrower may obtain a zero down mortgage with a midscore FICO as low as 560, but this score is the lowest allowed.

Homebuyers who don't have a high enough score to qualify for a zero down mortgage may also rely on another source of funding for the down payment... a gift, or money given by a parent, other relative or friend which does not need to be repaid. A person may give another person up to $10,000 per year without either party being taxed. A married couple, therefore, could give a child or spouse as much as $40,000 for a down payment tax-free. If you do use gift money for a down payment, you may be required to present a letter stating so... that's signed by both the giver(s) and the receiver(s) to the lender.

Another form of down payment gifting permitted by some lenders is when a home or property is being sold, and the seller may be a relative or friend who will credit the buyer with a down payment... even though no money for a down payment is actually being rendered to the seller as a down payment. This works for the borrower who does not qualify for 100% financing, but does qualify for 90%, 85% or 80% LTV (loan-to-value) financing.

For more on down payment gifts, it's best to talk directly with a Senior Loan Consultant who can explain the intricacies of creative down payment gifts. You can speak freely to one by calling toll-free: 1.888.890.5625. Or, you can schedule a completey free, phone consultation by clicking here.