5% of purchase price of home?

aparry, i think they may have miscommunicated what they need. as a general rule, you must have 5% of your own funds into the transaction. so...of that 20% you're putting down, 5% of it has to be proven to be your own funds - funds you've saved on your own, for example.

i don't get a lot of conventional loans these days with 20% down, :( so i might not be totally correct; but it is my experience that with that large a down payment, the need for you to document this 5% is generally not there. perhaps the guideline changed yesterday and i didn't get the memo.

I believe you are correct George. In the scenario above, at least 5% of the borrower's down payment money must come from his/her own funds. The remainder of the requires assets may be a gift.

However, there are lenders who put caps on the gift.

I went through the whole pre-approval process, got approved for the mortgage and then, two weeks before we are set to close, they throw this requirement at me. Just wish I had known about this from the start . . .

Thanks so much for your replies. Wish us luck!

one thing, guest: don't blame the loan officer, please. things are changing (RIGHTNOW!) constantly, and those underwriters who were considered to be "liberal" or "common-sense" types are pretty much dinosaurs now.

we all find things out too late to alert our borrowers in many cases - i hope your establishing this 5% of your own funds will be fruitful.