I think I am in a mess - gifted cash for downpayment from girlfriend.

[Anonymous]

I think I am finding myself in a mess with the house that I have an accepted offer on.

I had been preaproved by both BOA and a local CT lender. The products were both 30 yr conventionals, good rates. Both loan officers were aware that I was close to my max DTI but based on my credit score both thought it could be worked out.

Both also were told that my downpayment was coming from my girlfriend who was in the process of selling her home. This was going to be gifted to me so I could purchase the next home for us to live in.

I just got a call from the one loan officer after being three days into the process that his underwriter told him the the cash couldn't be gifted from my girlfriend and had to be gifted from a family member.

Is there any way around this mess? The funds are obviously not coming from the seller. We are having the proper paper trail since the funds are coming directly from the sale of her house. It also isn't a gift of equity, since I am not trying to buy her house.

This is going to leave both of us the option of renting only, and it is going to sink the sale on our dream house.

What else can I come up with here? Is there some way to work this out with the underwriter?

The only work around I can think of is a USDA loan to cover all of the financing, and she write a note to the seller for the difference between what I can finance with USDA.

My father could gift me the cash, and she could gift him back her money from closing on the house I guess.

Fun times, I hope I don't lose this house!!

[Anonymous]

the USDA with her paying the difference seems unlikely, and USDA is strict on DTI, so if there are DTI issues that is probably out.

Your father could gift you the money, but it can not be with the understanding that anyone is paying it back to him.  As far as the lender, lo, and UW are concerned it has to be just a straight gift.  They will require documentation from him including bank statements, etc to show where these funds are from, etc.

Other option, if your GF is moving in with you and wanting to pay the DO anyways is to put her on the loan.  Then her funds could be used no problem.

[Anonymous]

I got an anwser back from BOA. It sounds like I can use gifts for up to 15% of the 20% downpayment. Another lender also confirmed this from their underwriting guidlines. I guess even if the gift was from my father I still would have to come up with the 15%. Both BOA and the other lender felt that I could use the proceeds from the home sale, but I would still need the 5%.

I guess I can get my father to gift me some cash so I can repay one 2500 401k loan, and then loan it out again. That would put me half of the way there. I could take a hardship withdrawl from the other remaining balance in the 401k, that would get me to the 5%. Of couse this has the worse tax implications & the gift from my father and then back out from the 401k may get shot down by an underwriter as a shell game of sorts.

I need to weigh this against a FHA loan. Am I correct in assuming that I would need to pay PMI on an FHA loan even if I have 20% down from the start of the loan?

[Anonymous]

Could I sell property that I own to come up with the remainder of the downpayment? In all reality the only thing personal property I have of value is a 1995 truck paid in full. I could get my father to purchase it from me to fill the gap.

[Anonymous]

If you do a 15 year loan and have 20% down, there is no PMI I believe.  But yes, on a 30 year loan you would still have PMI.

Also, selling the truck may not fly or it may be OK.  Discuss with UW before you do so.  They really want to see pre-planned savings, not last minute shell games to come up with money.  I do not know if there are limits on FHA how much can be gifted or not.

[Anonymous]

Also, conventional is going to be alot mroe likely to require cash reserves so if you are breaking into 401K to come up with $, conventional may not work anyways.  FHA will overlook lack of reserves with a decent file, but no reserves, 401K loan and gift funds for down payment, etc is going to have to be sold to an underwriter.

[Anonymous]

OK, here is where I stand, I was hoping that I get some more responses from some loan officers on this.

I am buying a home with my girlfriend, a huge commitment, and arguably larger than marriage. Definetly harder to break up than a marriage (and yes we have a full residential agreement to protect us both).

I was planning on proposing to my girlfriend soon, I know she would say yes, but I wanted to do this after I could save up for a nice wedding.

If we get married now, and I am added to the deed will this change my problem with using the proceeds from the house.

In my mind at that point it is OUR house, so the proceeds are 1/2 mine. CT is not a community property state, so I believe I can continue to apply for the mortgage without her on the application, of course the lender may balk at this.

I was going to marry her any way, and this house is going to be the start of our new life. I am hoping this may get me past this hurdle. Any thoughts?

[Anonymous]

I am breathing a sigh of relief, because this was getting CRAZY.

I now have two loan officers confirming that per their lending guidlines, and fannie mae guidelines that a fiance or domestic partner is an eligible gift donor.

I also had two now confirm, one with a PDF copy of their lending guidlines, that the gift could be the entire down payment if the LTV is 80% or less. One was a little more specific and said that the donor had to give 20% or else I would have to do 5%. Either way it looks very promising that this will go through.

I was put through automatic underwriting and was approved at 41% DTI, and a middle score of 742. This got me 5.25 at a 60 day lock. I may continue to look around since the first rate I received was 5%, but then that loan officer raised all the flags about the gifts.

Here was the guidelines from the one loan officer:

This is copied from the fannie mae guidelines.

A gift can be provided by:

• a relative, defined as the borrower’s spouse, child, or other dependent, or by any other individual who is related to the borrower by blood, marriage, adoption, or legal guardianship; or

• a fiancé, fiancée, or domestic partner.

The donor may not be, or have any affiliation with, the builder, the developer, the real estate agent, or any other interested party to the transaction.

Minimum Borrower Contribution Requirements

If the gift is less than 20% of the sales price, the lender must document that the borrower contributed his or her own funds equal to at least 5% of the purchase price of the property.

Can any of our resident loan officer guru's confirm? I am so glad that I don't have to do anything convoluted to work this out!

Oh, and also in good news, when I asked her to marry me she said yes.

Message Edited by DougH on 01-22-2010 05:54 AM