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Updated about 4 years ago,

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5
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Dina C.
  • Pasadena, CA
0
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5
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Are gift funds allowed when purchasing a second house?

Dina C.
  • Pasadena, CA
Posted

I bought a house for $300K in cash 6 months ago that I want to use as a vacation house. My domestic partner gave me $60K as a "gift" and I am adding him to the title. I want to get a 30-year mortgage now and pull my cash out. Are gift funds allowed in this situation? If yes, can you please provide a link to Fannie Mae site where it says that it's allowed? Based on other posts, it might be allowed. 

I was able to find only this:

https://www.fanniemae.com/content/guide/selling/b2...

Delayed Financing Exception

If the source of funds used to acquire the property was an unsecured loan or a loan secured by an asset other than the subject property (such as a HELOC secured by another property), the settlement statement for the refinance transaction must reflect that all cash-out proceeds be used to pay off or pay down, as applicable, the loan used to purchase the property. Any payments on the balance remaining from the original loan must be included in the debt-to-income ratio calculation for the refinance transaction.

Note: Funds received as gifts and used to purchase the property may not be reimbursed with proceeds of the new mortgage loan.

However, per this: https://www.fanniemae.com/content/guide/selling/b3...

Gift Funds

A borrower of a mortgage loan secured by a principal residence or second home may use funds received as a personal gift from an acceptable donor. Gift funds may fund all or part of the down payment, closing costs, or financial reserves subject to the minimum borrower contribution requirements below. Gifts are not allowed on an investment property.

Can I have gift funds or not?

Thanks!

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