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Gift funds given months before closing?

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Regular Contributor

Gift funds given months before closing?

Just some quick clarification needed on gift funds and down payments. If we recieved money shortly after the holidays from our parents, and want to apply those funds towards the down payment on a house in August/September (closing), do we still have to jump through the same hoops with cancelled checks, letters, etc?

Alternately, if we paid some of those monies to the builder this month as an earnest money deposit that will be returned to us at closing (to use toward down payment if we want), is that likely to cause issues?

We aren't sure if we will even need to use the gift money, but I'd like to know our options and legalities in advance. Thanks!
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Fico Scores:
EQ - 811 (Feb '14)
TU - 829 (Mar '14)
EX - 814 (Mar '12) - Lender Pull
Message 1 of 7
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Contributor

Re: Gift funds given months before closing?

They only request you to explain large deposits/withdrawals in the last 2 months.

So if you're not in a hurry and want to skip extra paperwork, just wait 2 statements before getting pre-approved. 

 

Message 2 of 7
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Moderator Emerita

Re: Gift funds given months before closing?

Generally they only ask for 2 months bank statements plus they will request the statement that contains the earnest money deposit you plan to gave to the builder. The underwriter is looking for seasoned funds.

 

The rationale for asking for the statement showing the deposit is to see if you had the funds in your account to give the deposit. The underwriter wants to see a canceled check usually too.

 

As to the building "giving" back your deposit, it is a paper transaction done on the HUD only. The HUD will show your deposit as a credit that is applied to your down payment.

Message 3 of 7
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Established Contributor

Re: Gift funds given months before closing?

I was told 3 months of statements looking at larger deposits. As far as the funds going to the builder, you may have to write a LOE about where you got the funds, but mine isn't requiring it.

 

@StartingOver10: regarding the deposit refund, I'm in a similar situation, I had to put a $5,000 deposit on the contract since I wanted upgrades and special options. Since I'm doing USDA with no downpayment requirement, that $5,000 will be refunded to me with a check at closing.  I will be using that to purchase my appliances and installing a fence.

Starting Score: 10/1/2011 EQ 568 TU 593
Current Score: EQ 664 TU 700 EX 701 (FAKO)

Message 4 of 7
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Moderator Emerita

Re: Gift funds given months before closing?


@thankfulheart wrote:

I was told 3 months of statements looking at larger deposits.  

 

@StartingOver10: regarding the deposit refund, I'm in a similar situation, I had to put a $5,000 deposit on the contract since I wanted upgrades and special options. Since I'm doing USDA with no downpayment requirement, that $5,000 will be refunded to me with a check at closing.  I will be using that to purchase my appliances and installing a fence.


Yes, you would get back everything since you have no deposit required. That's a good thing. I never even thought about the no money down deals because where we are no money down is not an option any more. (The last time we could do no money down was either 2006 or 2007 in our area).

 

Some lenders do require 3 months of statements. That appears to be lender specific though.

 

Congrats on your new home! Sounds like a great deal with USDA. Smiley Happy 

Message 5 of 7
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Super Contributor

Re: Gift funds given months before closing?

most lenders look at 2 months statements.....

older deposits are considered 'seasoned' and not required to document

 

Retired Lender
Message 6 of 7
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Established Member

Re: Gift funds given months before closing?

MOST lenders require 2 months of statements but there are exceptions; our lender (we are scheduled to close May 18th on a new build home) required statements for the months of the original deposits as well as all three months of this year. Then they needed to source a deposit to savings (even though the statement shows the account it came from) so they requested last December's checking account statement, too. (So they now have the last 4 months checking account statements.) For safety 's sake I would have my funds seasoned for at least 4 months before I applied for a loan if I thought there might possibly be any red flags raised.
Message 7 of 7
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