Do I need to hide the fact that my parents are giving me money for a down payment?

Having generous parents is nothing to hide. An estimated one-third of first-time buyers purchase their home with a loan or a money gift from their parents.

Lenders will ask for a gift letter stating that no repayment of the "gift" is expected. According to "Realty Bluebook," Edition 29 (Professional Publishing Corp., San Rafael, Calif., 1993), a signed gift letter must:

--Specify the amount of the gift and the date the funds were transferred.

--Indicate the donor's name, address, telephone number and relationship to the borrower.

--Include the donor's statement that no repayment is expected.

Besides the letter, a lender can ask for two or three months' worth of statements for the account where the down payment funds are located. If the money was recently placed into that account, the lender may ask where it came from and request verification of that source as well.

Lenders often have stricter restrictions on gifts from friends and relatives. Also, if a buyer puts less than 20% down, some lenders may require that a portion of the down payment be their own cash. Check with lenders to learn the restrictions of specific programs.

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