The Truth About Gift Funds With A Fort Lauderdale Mortgage

What You Need To Know About Gifts For A Ft Lauderdale Mortgage Transaction

There are more requirements these days surrounding the use of gift funds for a Fort Lauderdale mortgage transaction.  It’s not a case of Fannie Mae or FHA suddenly changing their guidelines, it’s more lender fear of proper validation and sourcing of the funds.  No bank wants to risk repurchase of a loan for not following Fannie Mae or FHA guidelines to the letter.  Of course, this has caused the pendulum to swing to the other side and needless to say, most lenders are examining gift funds for a Ft Lauderdale mortgage transaction under the microscope.

So, here’s what you need to know to complete a successful Fort Lauderdale mortgage that involves gift funds:

The Ft Lauderdale mortgage must be the primary residence or second home of the borrower.  The funds must be received as a personal gift from an acceptable donor to apply to down payment, pay closing costs or supplement reserve requirements.  Gifts are not allowed for an investment property purchase with a Florida home loan.

An Acceptable Donor To A Fort Lauderdale Mortgage Transaction Can Be:

• a relative, defined as the borrower’s spouse, child, or any other individual who is related to the borrower by blood, marriage, adoption, or legal guardianship.
• a fiance’, fiancee’, or domestic partner.

An Unacceptable Donor To A Ft Lauderdale Mortgage Would Be:

• the builder
• the developer
• the real estate agent
• any interested party to the transaction

Minimum Borrower Contribution To Florida Home Loan Transaction:

• Conventional financing with a loan-to-value greater than 80% requires the borrower to provide a minimum of 5% of the down payment from their own funds.
• Conventional financing with a loan-to-value of 80% or less can have 100% gift funds for their Fort Lauderdale mortgage transaction.
• FHA financing allows the borrower to receive 100% gift funds for their Ft Lauderdale mortgage transaction.

When gift funds are being used in conjunction with a Florida home loan, there are specific documentation requirements to paper trail not only the receipt of the gift, but also the donor’s ability to give the gift. All borrowers bank statements will reviewed for the most recent two months.  Any large deposits will need to be explained and documented.

Fort Lauderdale Mortgage Documentation Requirements:

• signed gift letter between borrower and donor specifying dollar amount of gift, that no repayment is expected, indicate donor’s name, address, phone number and specify relationship.
• copy of donor’s most recent bank statement showing ability to give gift amount indicated.
• copy of donor’s transaction showing gift coming out of their account.
• copy of donor’s check.
• copy of borrower’s deposit slip from gift funds.
• borrower statement or transaction summary showing receipt of gift funds.

Remember, cash is an unacceptable source of gift funds for a Ft Lauderdale mortgage loan.  The donor can’t provide a cash gift and the borrower can’t make a cash deposit to be used in connection with their Florida home loan. When planning a Fort Lauderdale mortgage involving a gift, it’s best to plan ahead and be sure you can properly validate all the funds being used for the transaction.

A CMPS professional is well qualified to examine and validate any gift funds being used in a transaction.  Contact Harvey Collier, CMPS, for all your gift fund or Florida home loan questions.