Question for those of you whose parents helped with a home purchase

[Anonymous]

We are currently house hunting. My in-laws have offered to help us with a down payment. It will be a 0% interest loan that we can pay off when we can with no time limit. Has anyone done anything similar? How did it all work? Did you have document it as a loan (to avoid paying taxes on the $$) Just curious how other people have navigated this scenario. TIA!

[Anonymous]

Do you know that if they give this no time frame to payback type of loan, that they will not need the money later on?

[Anonymous]

No they will not need the money later on, otherwise they would not be offering this type of loan. What they are offering us is pocket change to them.

[Anonymous]

The gift limit this year is $14,000. So your FIL could give you and your spouse each $14,000 and your MIL could do the same for a total of $56,000. That is if you want to consider the money a gift and not a loan. If it is a true loan, instead of a gift, with a repayment schedule, then the rules change and your lender might not consider it as true down payment.

[Anonymous]

My parents gave us the money with no expectation of repayment. It was a gift. That is how we roll.

[Anonymous]

We just did the same and my parents had to verify that it was a gift for the lender. We signed a paper stating there was no expectation of repayment by my parents. However, we do hope to repay them, when it's easier for us.

[Anonymous]

Anonymous wrote:The gift limit this year is $14,000. So your FIL could give you and your spouse each $14,000 and your MIL could do the same for a total of $56,000. That is if you want to consider the money a gift and not a loan. If it is a true loan, instead of a gift, with a repayment schedule, then the rules change and your lender might not consider it as true down payment.


Actually they will consider it a loan and take that into account when calculating your LTV and whether you can afford to pay back the mortgage. If you in-laws can afford it and have no issues with gift taxes then an outright gift is the best way to go - no complications in the mortgage process.

[Anonymous]

The strings go on forever.

[Anonymous]

My mother was the mortgage lender on our house. She insisted, as she had the money and wanted us to be 'paying it to ourselves' in the form of eventual inheritance, as opposed to the bank. We had a mortgage document drawn up using the family loan interest rate (there's a table online somewhere) and paid her monthly (principal and interest only - we paid insurance etc on our own). It was never a problem in any way. She did pass away before the term expired (we did it as a 9-year balloon and planned to discuss the terms at that point) and we inherited the house outright.

[Anonymous]

Anonymous wrote:The strings go on forever.

Sorry that'd be the case in your family. Wasn't in mine.

[Anonymous]

You need to work with your lender and tax accountant. Many lenders are uneasy with these situations, especially in today's climate.

[Anonymous]

The strings do not go on forever for most people, unless the parents making the loan/gift aren't in a position to do so.

OP, if they are not gifting already, this could be the way to go.

[Anonymous]

It must be nice to have rich folks.

[Anonymous]

Anonymous wrote:It must be nice to have rich folks.

Yes, it is.

[Anonymous]

Anonymous wrote:

Anonymous wrote:The strings go on forever.

Sorry that'd be the case in your family. Wasn't in mine.

Oh, but it one sense it is. In the "no strings attached" way maybe not but in the "still clinging to your momma's apron strings" way... definitely.