Using Private Loans as a Down Payment

[Brice Aldrich]

Hello, I am interested in raising capital to purchase multi family homes. To do this I was going to ask my family if they would be willing to loan privately at a competitive interest rate. I intend to use the private loan(s) as a downpayment.

Typically when applying for a mortgage banks will ask if the funds for the down payment were borrowed or gifted. To my understanding most banks will not loan if the downpayment is borrowed, and if the money is gifted there are stipulations.

My questions for you are:

1. Is it true banks will not loan on a borrowed down payment?
2. If the above is true, couldn't I just say the money is gifted?
3. If I say the money is gifted how does that protect the private loan(s) relationship(s) between my family and I?
4. What are the stipulations of a gifted down payment?

Thanks in advance for any help/advise!