Thanks for your help,
I'll contact him and ask him to clarify why the gift funds won't work.
What he told me was, "per FHA, the down payment cannot come from a grandparent – in law unless your spouse was on the loan."
Hi OP and welcome to myFICO
And if your LO doesnt get it or understand the rules, find another LO who does because you’re guaranteed to have more snafus with your LO.
I'm assuming you are speaking of the 401k loan. Take the money out of the 401k to put towards the mortgage. Then use the gift from your relative to pay off the 401k loan.
i dont recommend doing this OP. As jville said, there’s no reason to go to this extreme.