Do I have to disclose a parent’s gift to the lender?

Lenders prefer that you do. But relax, you are not penalized in any way for receiving parental help. An estimated one-third of all first-time buyers purchase homes with a loan or a money gift from parents.

Lenders also will approve gifts, with the proper documentation, from relatives, friends, an employer, church, municipality, or nonprofit organization – although stricter restrictions may apply for gifts from friends and relatives other than parents.

Expect the lender to ask you to present a gift letter stating that a repayment of the “gift” is not expected. The amount of the gift and the date it was given should be clearly stated in the letter, along with the donor’s name, address, telephone number and relationship to you.

The lender also can ask to see a few bank statements to ascertain if the money was recently placed into the account.

A gift may be more acceptable than an actual parental loan, particularly if the loan must be paid back immediately, which could contribute to an increase in your monthly debt – something a lender may frown on.

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