If you are thinking of buying a home, you may be lucky enough to have friends and family that are willing to contribute to your down payment. Where the money comes from makes a difference to the bank because they need to be sure it isn’t considered a loan that must be repaid. Gift money may require you to get “gift letters” from each person contributing to attest that it is not a loan. Gifts from friends can get trickier, so try to stick to family only. It’s best to check with your lender before accepting any money from anyone.

Key Takeaways:

• The reason is that a loan would have to be added to the debt calculations the lender uses to ensure you can afford to repay the mortgage.
• Despite the convenience of online and mobile banking apps, you may still want to go old school to create a paper trail for the gift. This makes it easier for a lender to trace the gift.
• Make a copy of the check for both your benefactor and yourself. The lender will need to see this.