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Why is it illegal to help your child buy a house?

I want to help my son and daughter in law buy their first home. Why isn't it allowed for parents to give the down payment? by tbeck916 from Gurley, Nebraska. Oct 21st 2019 Reply


Phil Georgiades (phil@fedhomeloan.org)
#995 ranked lender in California - 20 contributions

Of course it is allowed! Gift funds are allowed on most loans but you will need to "source" the funds. This usually means that the lender will wait to see 3 months of bank statements. This is to prevent money laundering.

Oct 21st 2019
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Phil Georgiades (phil@fedhomeloan.org)
#995 ranked lender in California - 20 contributions

Correction, that should read "the lender will want to see"

Oct 21st 2019
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Amy Wedig (amywedig)
#36 ranked lender in Ohio - 9 contributions

Hi there! It is not illegal to gift your child a down payment. But there are some rules. First, you have to sign a gift letter provided by the lender. Second you need to provide the lender with your most recent bank statement prior to giving them the gift check, showing you have the money to give them. Third, you need to write them a check. Fourth, once they check clears your bank account, you need to provide a transaction history from the bank teller going from the ending date of the donor's bank statement to current showing the gift check cleared the bank. If you obtain this from the bank teller, it has to be signed & stamped by the bank teller. Printouts can be done on-line but they must have the last 4 of account number on the first page & the bank's web address, must be clearly visible, at the top & bottom of each page of the printout. I hope this information helps out you out!Thank you!Amy WedigLoan OfficerLiberty Home Mortgage332 Jefferson St.Greenfield, Oh 45123Phone: 614-603-0426Fax: 888-688-1760awedig@libertyhm.comNMLS# 268257Company NMLS# 1114762

Oct 21st 2019
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Sara Deere (Mortgagequeen2)
#1 ranked lender in Missouri - 584 contributions

I agree with the previous answer. Gifts are allowed on the most residential mortgage loans, but the funds do need to be sourced by showing at least two months statements. Also any large deposits need to be sourced that are not connected to work or retirement benefits.

Oct 21st 2019
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Dennis Clark (DennisClark)
#8 ranked lender in Nebraska - 23 contributions

It is not illegal to help your child buy a house. I helped my son buy his house by gifting him down payment money. The FHA and Conventional loan programs have guidelines in place which apply in these situations. If you need help with this or have any further questions, feel free to contact me. I am located in Omaha, NE.

Oct 21st 2019
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Joe Metzler (JoeMetzler)
#1 ranked lender in Minnesota - 3,986 contributions

No such rule... You can help in multiple ways. The most common is by giving them a gift for down payment. This is done all day everyday. You can also 'co-sign', but in the home financing world, the correct term is really known as a non-occupant co-applicant. If you are selling them your home, you can also give a gift of equity, no money needed if there is enough equity in your home. I lend in MN, WI, and SD, I can be reached online at JoeMetzler.com. NMLS274132

29 days ago
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