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With FHA, this actually will be fine. The donor may borrow funds that are to be gifted to the borrower. It's a common misconception since the borrower often may not borrow the funds for the down payment.
are being borrowed by the donor, and
documentation from the bank or other savings account is not available
have the donor provide written evidence that the funds were borrowed from an acceptable source, not from a party to the transaction, including the lender.
Bet most people also did not know that the borrower can borrow the money for down payment if it is from a family member - either as secured (against the property) or unsecured.
FHA permits family member lending on a secured or unsecured basis, up to 100 percent of the borrower's required funds to close. This lending may include the down payment, closing costs, prepaid expenses, and discount points.
Further guidance on "Family Member Financing" can be found at FHA Handbooks (http://www.fhaoutreach.gov/FHAHandbook/prod/infomap.asp?address=4155-1.5.C.6 - broken link)
I'm sure someone will chime in and say this, so I am just going to say it now so don't take offense to it-
Should you really be buying a house if you have to count on student loan money surpluses for a down payment?
Agree!! Doesn't matter whether it's possible or not, but please don't do it.
God forbid you can't pay back the mortgage, it's possible to get out of it. But with a student loan, you can't ever get out of it.
Just use the extra loan money to pay back your loan...you'll be glad you did.
And work on your own credit in the mean time! Houses will always be there, they aren't going anywhere!
but...I've been told that because I'm gifting her the money that I can borrow it...as long as it is not from a party to the transaction, including the lender.
I get my student loans mid january, and we want to puchase mid february...that's why it's a concern.
1. if your parents gifted you money, they are required to sign a statement that the money isn't from a loan. so just as was already stated...no go.
2. why buy a house if you're depending on excess student loan money (if private, at a high interest rate) for the down payment?
1. if your parents gifted you money, they are required to sign a statement that the money isn't from a loan. so just as was already stated...no go.
2. why buy a house if you're depending on excess student loan money (if private, at a high interest rate) for the down payment?
When you finish school will you be working in the same city that your home is located in? Lets say that you complete your degree and end up moving to another area to work. Now you are stuck with a home that you can't really afford.
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