Posted on: 19th Jan, 2009 03:23 pm
My parents are looking to give me a gift equal to the cost of a downpayment on a coop of my choosing (I haven't found it yet). I'm wondering how does it affect my mortgage rate if my whole downpayment comes from a gift? Also, will anyone question the large amount of money which all of a sudden shows up on my bank account from the gift? Should I have my parents give me the gift in smaller increments? Thanks for your help!
A gift does not necessarily have an impact on your rate. However, typically gifts are for less than 20% of the value of the home. The smaller ( as a percentage) the down payment, the higher the rate. One other note regarding your scenario is that many banks do not fund coop properties. It would be in your best interest to look for a condo instead.
To answer the second part of your question, yes the bank would question the large deposit into your account. You have two ways to go about this...
1. The preferred method is to get those dollars into your account NOW. The banks will look back two months on your account statements. If the money is there before that time, then you would be ok.
2. You can get your parents to sign a gift letter. This would be required by the bank if you had to prove where the sudden large deposit came from. Keep in mind that many banks do not allow ALL of the down payment dollars to come from a gift. Therefore, option #1 above would be the best scenario for you.
One final note is you will also need funds for closing costs and depending upon the bank you are working with....2-4 months reserves.
To answer the second part of your question, yes the bank would question the large deposit into your account. You have two ways to go about this...
1. The preferred method is to get those dollars into your account NOW. The banks will look back two months on your account statements. If the money is there before that time, then you would be ok.
2. You can get your parents to sign a gift letter. This would be required by the bank if you had to prove where the sudden large deposit came from. Keep in mind that many banks do not allow ALL of the down payment dollars to come from a gift. Therefore, option #1 above would be the best scenario for you.
One final note is you will also need funds for closing costs and depending upon the bank you are working with....2-4 months reserves.