mortgage question of the day?????

Today's Mortgage Question Of The Day:
Q: Can gifted money be used towards a downpayment? If so, does that money have to be reported to the IRS as gifted money?

A: You are basically asking two different questions. Let's separate the two. Yes, gift money can be used towards a downpayment. FHA loans for example allow 100% of the downpayment to be gift funds. Most FannieMae lenders allow 100% of the downpayment to be gift funds as long as it is a 20% downpayment.

Some lender/investors do have restrictions on this so it's best to talk with your lender before making an assumption. If they don't like your solution then shop around.With less than 20% downpayment using conventional loans typically the Mortgage Insurance providers are going to require some percentage of the funds to come from your own account, typically that is 5%, but you should check with your lender to verify.

The final thing on gift funds is that typically they need to be from a "relative", Parents, siblings, cousins, etc. With regards to the IRS that's really a tax question for a tax advisor to answer. In my experience there is no reporting between the gift letter/funds that are provided to the lender and the IRS.