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I got married two weeks ago and we were given $5250 in checks and $500 in cash(actually I won the $500 cash in Vegas on our honey moon ). I deposited this money into a saving account that only had $500 in it. We have been planning to buy our first house after school gets out this summer. I started looking at the different types of loans out there this week and decided a conventional 30 year fixed would be the way to go. We plan to put the minimum 5% down on a house in the range of about 150k-160k($7500-$8000). I originally planned to get the down payment money out of my IRA. First time home buyers are allowed to take up to 10k out of an IRA without the 10% penalty. After receiving the gift money I felt we had enough between the gift money and what we currently have in our checking accounts to cover everything. I was very excited to not have to reach into my IRA at this point.
Today I find out that if you are only putting 5% down on a conventional 30 year loan it can't be from gift money. It will probably be 2-3 months before we start the home buying process. We currently pay $1700 in rent. We usually pay that wire transfer through checking accounts. I was thinking about start paying rent for the next 3 months out of that savings account with the gift money. That way our wedding money would be just about gone. At the same time our checking accounts would be saving $1700 a month by not paying rent out of them. All of the money that will be saved up in those checking accounts could be documented it came from payroll.
Would this money in our checking accounts be accepted by the banks as our own money towards the down payment?
Go back and check again. Fannie allows all of the 5% to be a gift, but the mortgage insurers require 3% of the 5% be your own funds. Don't worry about it, the lenders are only going to go back 60 days. So, by the time you are ready to by, just get a signed 60 day print out and all this is history. Whoever you talked to probably only works with one mortgage insurance company. Ask them to check the Genworth MI Guidelines. We had a rep in last week and we discussed this very issue.
(But to answer your question, yes, your plan would work, but I don't think it's necessary).
Back up. You said you're not even looking for a house until the summer. Lenders only require 2 months of bank statements. As long as money has "seasoned" in your account for those two months, the banks don't care where the money came from. It's now your money and not a gift. As long as the lender doesn't see the actual deposit and the first statement you give them has the money already in the account, it's considered your money according to all lenders.
I believe what they are really looking for is "gift" money that might have to be "paid back" so actually not a gift. Years back some builders/developers would do this.
I do not believe it "all" being one time wedding gift money would concern them even the few $K that arrived say a month or two later from overseas relatives who just learned of the marriage.
If this is your first home, have you explored doing an FHA loan? You would only need to put 3% down and I think there are a lot of good options associated with FHA for first time home buyers other than doing a regular 30 year conventional loan. Not sure but I think the fees and rates might be better.
I agree with other poster--they typically only ask for 2-3 months of bank statements so it would be past the time of when you actually deposited the funds.
I have considered a FHA loan but if I were to go that route I would have to be getting on it a little sooner than I would like. When the new rules kick in early June you will have to pay mortgage insurance for the life of the loan if you put less then 10% down. Currently you only have to pay it until you pay off 22% of the home. Paying mortgage insurance for the life of the loan seems like highway robbery to me.
As other have mentioned if you are going to waiting 60-90 days it might be acedemic. You also should know that Freddie Mac has a 5% down conventional loan program that allows gift money towards your down payment. Ask your lender about it.
The 5% down conventional loan is a much better deal than FHA these days.
Yes, your assumption is correct. Start paying your rent out of your savings account and let your paychecks accumulate in your checking account (assuming your direct deposit goes into checking). As others have said, the lender only needs to go back 2 months of bank statements. Are your checking and savings statements separate? Hopefully so. I wouldn't even present the savings statement to your lender. The underwriters and the PMI get very uptight about any deposits that aren't your paychecks.
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). I deposited this money into a saving account that only had $500 in it. We have been planning to buy our first house after school gets out this summer. I started looking at the different types of loans out there this week and decided a conventional 30 year fixed would be the way to go. We plan to put the minimum 5% down on a house in the range of about 150k-160k($7500-$8000). I originally planned to get the down payment money out of my IRA. First time home buyers are allowed to take up to 10k out of an IRA without the 10% penalty. After receiving the gift money I felt we had enough between the gift money and what we currently have in our checking accounts to cover everything. I was very excited to not have to reach into my IRA at this point.
