Building Credit & Gift down payments

jennibug00

My husband has never had anything in his name. His parents have paid for everything to keep him out of debt. Though this is helpful, it isn't helpful in our quest to get a house...Hubby recently got a credit card through his bank that he is going to fill up his gas tank once a month and pay it off to build his credit.

I have mediocre credit. I have had late payments and a few other blemishes and am trying to work to rebuild my credit.
Suggestions?

Also...
His parents are going to give us $20,000 for a down payment, but I've heard that there are issues with "gift downpayments". Anyone dealt with this?

Jenn in TN

eelyram7

There aren't really any issues with gift down payments besides paperwork. The lender will want to see paperwork to show where the money is coming from (to make sure it isn't a loan which would affect your ability to pay your mortgage). They will also ask for his parents' bank statements for the past couple of months to make sure they can really afford to give this gift.

 If that sounds like too much, there is another way. The lender will only ask for 2 months worth of your bank statements when verifying income and savings. If his parents could give you guys the money now and let it sit in your savings account for at least 2 months, the lender will just see it as your savings and won't question where it came from (it won't count as a gift).

 Basically lenders just want to make sure people can repay their mortgages and avoid  foreclosures. Gift down payments are no big deal.

Tangerine01

My husband's grandparents gave us a gift downpayment, and it was no issue.  They can apparently give up to 20k per person, I believe.  They split it up into 4 payments of 10k for tax purposes on their end.  Your lender can talk you through all the specifics, but they do need lots of documentation of the money transfers and a gift letter to go with it.

 As far as building credit, that will just take time. 

SKW1987

Be Careful, make sure that if the money is going into your individual bank account that it comes from a direct relative of YOU.  Before we got married my in-laws put money into my account as a gift to help us with our down payment on our house.  The lender would not count that money since it did not come from a direct relative of mine.  If you have a joint account this shouldn't be an issue.  

Amanda1443994

As others have said, there should be nothing wrong with the gift. By federal law, each parent can gift a child up to $13,000 tax free per year. If you go over this (which by your numbers you wouldn't), then there would be a penalty. So you'll be fine. My parents did not have to fill out any paperwork on their income or anything. Our mortgage dealer just had them fill out a piece of paper with their name, gift amount, and sign it.