Using Gift Funds With A Veterans Home Loan

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• GIFT FUNDS FOR A VA HOME LOAN

• ARE THEY ALLOWED?

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• When a veteran decides to purchase a home, they
  will often try to obtain a VA home loan. These
  loans are designed to provide veterans with a
  number of benefits.

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• Although no down payment is required, in some
  situations, a veteran may still want to provide a
  down payment to bring down the loan amount and
  house payments.

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• They may use something known as gift funds. This
  is money a person may give a person with no
  strings attached.

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RULES
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• If a person puts down 20
• or more of the down payment
• for their mortgage, the entire amount can be from
  a gift fund.

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• If less than 20 of the money
• for the down payment is from
• a gift fund, the rest of the down payment must
  come directly from
• the veteran.
• The minimum contribution will vary.

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• Gift funds are only permitted
• to be used when purchasing
• a primary residence as well
• as a second home.
• It cannot be used to purchase
• any type of investment property.

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REQUIREMENTS
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• A person can't just present a large amount of
  money to a lender with no explanation.

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• When someone is going to be using gift funds,
  they need to provide documentation. They must be
  able to show the money came from a family member
  or another acceptable source.

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• They will need to provide a legal and legitimate
  paper trail showing how they obtained the funds.
  This can be done with documentation from a bank
  account or other financial institution.

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LEGITIMATE GIFT FUNDS
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• It's important to realize only funds considered
  truly legitimate can be used as gift funds.

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• There cannot be any type of agreement in place
  for the funds to be paid back to the individual
  or entity that is providing them.

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• The gift funds are not permitted to come from any
  individual or entity that would benefit from the
  sale of the home.

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• If any of these people are related to the
  individual seeking a loan, they're not permitted
  to provide gift funds to the borrower for the
  purchase

• Seller

• Real estate agents

• Loan officer

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GIFT LETTER
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• Some lending institutions will require a borrower
  to provide a gift letter before being able to use
  gift funds for the purchase of a home.

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• The gift letter needs to list

• Donor's name

• Address

• Phone number

• Type of relationship they have with the borrower

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• The address of the property being purchased also
  needs to be listed.

• The source of the funds such as the bank account
  where they are located needs to be mentioned.

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• The date the funds will be provided need to be
  explained.

• A statement that the funds will not need to be
  repaid should be included.

• The donor's signature also needs to appear at
  the bottom of the letter.

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TAX CONSEQUENCES
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• Experts advise individuals who intend to use gift
  funds for the purchase of their home to contact a
  tax professional.

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• Its possible there will be tax consequences for
  the recipient of the funds as well as the person
  or entity who gave them.

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• It is not the lender's responsibility to report
  any type of gift funds used to obtain a mortgage
  to the IRS.

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• The tax consequences for each borrower and gift
  fund provider may be different.

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• Mortgage Originator Jimmy Vercellino,
  specializing in VA loans, helps veterans use
  their VA loan benefit to their greatest
  advantage.  

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• For more details call 480-351-5904. Visit the
  site at https//www.valoansforvets.com/va-pre-loan
  -faq/

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VA LOANS FOR VETS 7702 E. Doubletree Ranch Road,
Suite 220 Scottsdale, AZ 85258 Phone (480)
351-5904 Email jimmyv_at_fcbmtg.com
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