4 Rules You Must Understand About Down Payments

4 Rules You Must Understand About Down Payments

You may know a home loan requires a down payment and that the amount depends on the loan program you choose. 

You may not know all down payments must be properly sourced.

What does that mean?

- If the money is a gift, you need a letter from the person stating as such and that you don't need to repay the amount. You also need to show a copy of the check.

- If the down payment comes from your bank account, a lender needs to make sure you have the money through bank statements. For more, check out this article on my website:
 8 Documents You Need to be Pre-Approved for a Loan.

- If the funds are proceeds from the sale of a property, a lender will need a copy of the HUD settlement statement that shows the transaction. 

- If the money comes from a retirement fund, you need to provide the terms and conditions for borrowing against the retirement funds, so the lender can verify if any repayment is required.