Can You Use a Gifted Down Payment?

How gifted down payments work with the different types of loans.

Can you use gifted money for a down payment? A lot of buyers are concerned about coming up with the down payment. Many of them don’t know that you can use gifted money for a down payment. Making a bigger down payment means you can afford a bigger home, and your rates might be better. That’s why I want to go through what each of the three mortgage types allows for gifted down payments:

1. Conventional loans. The typical minimum down payment is 3%, and that can be gifted. Certain restrictions apply, so we want to partner with a lender who is familiar with those restrictions and ensure that we have the proper documentation.

"Work with an agent and a lender who can help you use the gift money as best as possible."

2. FHA loans. This government-backed loan also allows gifted down payments, but they are a bit stricter on who is allowed to give you that money. The FHA actually allows for employers and government entities to gift a down payment as well.

3. VA loans. This loan is for the wonderful men and women who have served in our military. The great thing about this is that VA loans don’t require a down payment, so you don’t have to worry about gifted money in the first place. 

The biggest takeaway from this is that you should work with an agent and lender who can make sure you’re using the gifted money as best as possible. If you have any more questions about gifted down payments or real estate in general, feel free to call or email me. I’d love to help.