Origination ActivitiesQuestion 254 of 400
A borrower wants to use a $10,000 gift from a parent for the down payment. What documentation does an underwriter typically require?
a.A promissory note showing the gift must be repaid
b.Nothing; gifts never need documentation
c.The parent's tax return only
d.A gift letter stating no repayment is expected, plus evidence of transfer and, often, donor ability
Explanation
Gift funds require a gift letter confirming the money is a true gift with no expectation of repayment, along with documentation of the transfer of funds and sometimes the donor's ability to give. If repayment were required, it would be a loan, not a gift, and would count as debt.
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