Gift Funds for Down Payments are often employed to salvage transactions. Gift Funds for FHA transactions need to be sourced at the DONOR level, meaning the Donor must prove her “ability to gift” with bank or investment account statements.
For Conventional Transactions, however, we have lenders that do not require Donors to “prove their ability to gift”. This feature is often very convenient. BUT, this is only the case if Donors write checks directly to escrow.
Donors should never give funds directly to Buyers, as it makes the “paper trail” issues more complicated.
Lastly, please remember that nobody knows (not us, not the lender, and not the IRS) if a “gift” turns back into a “loan” after close of escrow. Transfers of money only need to be a “gift” through close of escrow.
Founder/Broker | JVM Lending
(855) 855-4491 | DRE# 1197176, NMLS# 310167