Expert: Brian HAHN - 3/18/2009

Question
My sister asked if I could borrow money on her behalf for a down payment for a home purchase. Her lending officer told her that they could not have a loan against them on paper so I should make a gift letter stating that the money is for the purchase of the home.  Is this a usually practice if the buyers do not have fund in  their bank account for a down payment?

Answer
April,
The down payment can be a gift from a family member - you will need to provide a bank statement providing evidence that you have the ability to give the gift.  If the money is not already in your bank account, you will need to provide documentation on where the funds came from to give as a gift.

Your sister could get a loan for the down payment, as long as she provides the loan terms in her loan application and she qualifies for the mortgage with the loan repayment terms for the amount she has borrowed.  She may want to get a second opinion from another loan officer on this.  If she goes out today, gets a loan and puts the money in her bank account, she'll have the funds available for her down payment.  If she isn't going to buy a house for 60+ days, she will not have to show that the money was "borrowed" as it will be "seasoned" funds in her bank account.

Either way should work for her, April

Respectfully,
Brian Hahn