Down payment money coming from someone else?

Many buyers are lucky enough to receive money from family or friends when they are buying a home. This is referred to as “gifts” and it’s very common and typically easy to document. It is important to let the loan officer know upfront if you will be receiving money because documenting assets must be done a certain way and there are certain requirements. In most cases we will need a copy of the check from the donor and your bank statement showing that check clearing along with a “gift letter” which is a bank form we will send to you for the gift donor to fill out and sign. The form provides information such as: how much money is being gifted, who it’s from and where the money specifically came from (bank account). Some loan programs will require the gift donor’s bank statement showing the money coming out of their account. If the money is given as a wire or transfer from another bank account – we also might need to see the gift donors bank statement. So planning ahead is helpful because we can try and make this process easier for you and the gift donors.

Many people try to avoid “gifting” because they think that means tax implications. The bank will require you to fill out a gift form but we are not sending a tax document to the IRS with this information. This is on the gift donor to figure out the implications but I have found a link that can give you some insight into the question from

According to the article, a person is allowed to gift $15,000 per year tax free. However, there is a lifetime gift allowance that allows gifting to each person up to $11.18 million dollars (federal exemption). The article gives a bit more detail and mentions that this might differ in certain States but for the most part I think the gift donor as well as the recipient are safe from paying taxes generally speaking (please consult a CPA or tax preparer to confirm this as I am not licensed to be providing guidance on this).

Chris Butts

VP Sales Manager

NMLS# 613440

Chris Butts is a Loan Originator and Sales Manager at Leader Bank. He has been in the mortgage industry for over 15 years and is committed to providing his customers with the highest quality service. His extensive experience and knowledge allow him to effectively and consistently help his customers during the loan process, whether it’s a first time home buyer, a refinance or purchasing a dream home.

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