Using Agent Commission towards down payment for my own Investment Property

[Anil Shah]

Hello BP Community, 

I am under contract to purchase a new construction home as an investment property and I am the RE Agent. Initially, we wanted to  have the loan under my wife's name only but my the loan officer from the builder's lending arm told us that if I am in the buyer, the RE Agent and the mortgagor (in the loan), I could use my agent commission towards closing costs and down payment. As such, we decided that I will have the loan in my name alone. Now that we are 10 days from closing, I am talking to loan officer to get the Closing Disclosure so that I can know the exact cash to close (I need to move money from brokerage to bank account) and he is mentioning about 2% IPC limit. 

My question is - do I have any recourse if the loan officer now deviates from what he initially told us verbally and in writing (I have the emails and text)? It might cause me financial harm as I have to sell more stocks and might pay short term capital gains vs long term capital gains. Also, I might need to pay tax on the RE Agent commission. Would love to hear more from other loan officers. We are talking about taxes on 15K.

On another note, I had the exact same issues 3 months back but that time, since the LO had not mentioned it, I did not push for it. My research said it was possible to use my RE Agent commission towards the down payment but he said we cannot and I just let it go. However, can I say that I gave a rebate to myself on that transaction for the full RE Agent Commission amount and decrease the cost basis of my house accordingly? That would help me save taxes on the commission. 

[Russell Brazil]

Yes you can use commission as sourced funds for down payment on a conventional loan.

However some lenders have internal overlays that don't allow it.