I am in process of closing on a home. I am pre-approved for a VA loan with 0% down. My estimated cash to close at the moment is $6400. I have already paid a $1000 earnest deposit and paid for the appraisal. I have $3000 in my savings account. I will have the remaining $3400 in the next few weeks from my paychecks and also a $1500 ‘gift’ from my boyfriend. He will be living with me but will not be on the loan. The underwriter just issued a conditional approval, and one of the things requested is an explanation of why I don’t have $6400 in my account at this time. Do I just explain that I am still saving? Is that going to mess things up? Can we still proceed or will they want to wait until I have the full $6400 to move on? Also, since my earnest deposit is $1000, will they require the full $6400 or just $5400?The closing date is July 20th.
I want to add that I make plenty of income for the mortgage payments, I just did not save in advance as it was a bit of a last minute decision to buy instead of renting another apartment. I was fortunate to have my very first offer accepted. I did not anticipate it to actually move this fast.
I think you’re going to have issues. You only need 5400, but they almost certainly aren’t going to proceed without seeing that amount now.
They would just need an additional $5400, but yes, they will likely wait until they can verify the funds to allow you to close.
Just be honest but also make sure your boyfriend signs a gift letter for that $1500 he’s giving you. They will need to verify that it is not a short term loan.
Best to not lie to an underwriter. Explain your ‘gift’ and understand that a buyer that walks into day 0 of a 30 year commitment without any money isn’t a prime candidate.
Are you sure you’re ready for a home? You’re wiping out every penny of your savings and banking on a secondary loan and future paychecks all to get the keys to a home you own 0% of… Also you’ll typically need to pay for a year of homeowners insurance and fund your escrow and pay the current owners for the property taxes remaining from your closing date to year end.
You should do exactly as the underwriter says, explain why you don’t have $6400. If they have further questions, then you answer them.
> and also a $1500 ‘gift’ from my boyfriend.
He will want a letter from the boyfriend explaining that this is a gift otherwise he won’t let you close.
Beyond that answer the questions, respond in writing to the underwriter and explain how you plan to have sufficient funds in the account to close the deal.
That is all you have to do.
The gift needs to get deposited ASAP, and a gift letter filled out. If there is any way to get more gift money from your boyfriend or family, please try to do that. For example, my parents gave me gift money, and I decided to pay them back anyway.
Keep your explanations as simple as possible, but be truthful. It may delay underwriting, but everyone involved wants to make the deal happen.
Document where all of your money is coming from. You shouldn’t have a problem as long as the underwriter can follow the paper trail.
Just explain your plan to the underwriter. The first VA loan we got, we had no savings. The closing costs were about equivalent to our earnest money. I think they’re slightly more lenient with VA loans. (Of course this was years ago)
Your earnest money will count towards your closing costs
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