Many (first time) buyers must realize that buying a home comes with a lot of upfront costs. These include inspections, appraisals, down payment, closing costs, and any necessary repairs or wish list items that may come thereafter.
In most cases, buyers ask Mom and Dad for some help.
Gifting Is Common
On average, parents or relatives are giving (gifting) approximately $39,000 to assist their children with their home purchase or to alleviate the buyers’ down payment amount and/or down payment. A gift letter is required if financing is involved. This states, the funds deposited in the buyers’ account are provided as a “gift.” The lender would require this letter to be provided with the proof of deposit into the buyers’ account; however, there are no expectations for the money to be repaid to the gift giver from the lender. The lenders require this letter due to their own bookkeeping for the financing allotted to contribute to the buyers’ purchase.