I’m confused about the rules for contributing funds as a gift after talking with a lender. My partner and I are not married, and the mortgage will be in his name due to his debt-to-income ratio. We have children together, and I’m not worried about ownership rights. However, I was told I can’t use $100k of my own money for the down payment. If I add his name to my accounts, could he then use the money? Any advice would be greatly appreciated.
You should be able to gift the money. Typically, you just need to provide a gift letter for the lender, which they should have a template for, and then wire the funds to the title company at closing.
Noor said:
You should be able to gift the money. Typically, you just need to provide a gift letter for the lender, which they should have a template for, and then wire the funds to the title company at closing.
This is usually the process unless specific program limitations or other factors prevent it. Best of luck!
Noor said:
You should be able to gift the money. Typically, you just need to provide a gift letter for the lender, which they should have a template for, and then wire the funds to the title company at closing.
There might be limits to how much you can gift, though.
@Noor
According to what regulation?
Having children together doesn’t automatically grant you ownership of property. Are you planning to be added to the deed? It’s risky to contribute such a significant amount without any legal claim to the property.
@Tatum
I’m hoping our relationship will last, but I know there’s always a risk.
Drake said:
@Tatum
I’m hoping our relationship will last, but I know there’s always a risk.
I’d advise against mixing significant finances like this without the protections marriage offers. It’s a potential legal complication if things don’t work out.
@Tatum
If we marry later, would I then have rights to the house, or does it remain his because he bought it before we married?
Drake said:
@Tatum
If we marry later, would I then have rights to the house, or does it remain his because he bought it before we married?
That depends on your state’s laws. I recommend consulting a real estate attorney to understand your rights and options.
@Tatum
Thanks, I’ll definitely look into consulting with an attorney.
Drake said:
@Tatum
Thanks, I’ll definitely look into consulting with an attorney.
It’s best to prepare for all possibilities. Take care and protect your interests!
Yes, you can make a gift since you are partners. However, some banks have additional requirements like ‘seasoning’ the funds. Are you on the purchase contract or will you be on the title?
Marlon said:
Yes, you can make a gift since you are partners. However, some banks have additional requirements like ‘seasoning’ the funds. Are you on the purchase contract or will you be on the title?
We share a bank account, and I plan to be on the title. Concerning the gift tax, am I going to face a high tax rate for gifting $100k?
@Drake
Being on the title changes things; it’s not technically a gift. As for the tax, consult with a CPA about the specifics to make sure you comply with IRS regulations.
If his name is on the account from which the funds are drawn, it wouldn’t be considered a gift, and thus eligible for the down payment. Otherwise, you’ll need to formally gift the funds, which involves tax implications.
@Aman
Who informed you that you couldn’t use your own money for the down payment, and what was their reasoning?
Aman said:
@Aman
Who informed you that you couldn’t use your own money for the down payment, and what was their reasoning?
The funds are in an account not currently shared with him, but we could add him. I was told about potentially paying up to 30% in gift taxes.
@Drake
If you add him to the account, he could use the funds directly for the down payment. Check with your lender to ensure this is acceptable, and don’t forget to consider the tax implications of a large gift.
Make sure to document that the funds are a gift and that repayment isn’t required. Your lender should provide the necessary paperwork.