QUESTION: My son and daughter-in-law are buying their first home. I’d like to help them with a down payment, is that possible?
Yes, but it has to be done following very specific guidelines. Sometimes when I get this question, the person asking has a vision of surprising their loved one. Maybe he or she is fantasizing about taking the couple out to dinner the evening before they close and presenting them with this large check. That scenario is probably not likely. There are strict rules that govern mortgages, and if you violate them your good intentions can be more problematic than helpful.
So, first and foremost, bring the kids in the loop and schedule a conversation with their loan officer. Tell him/her the parameters of what you’d like to do. They’ll let you know if the loan program you son is using allows money to be gifted. If it does (many programs do allow gift money), the loan officer will give you very specific directions on how to make it happen. You will likely be asked for paperwork documenting the transfer of funds, for instance, bank statements and canceled checks.
Yes, it can be slightly complicated, but the good news is if you follow the guidelines, it’s not only possible, it is also quite common.
