Helping hand could go long way for some buyers

News from Fannie Mae could mean that young buyers moving into new homes or older consumers looking to trade up can put a financial gift to good use.

The New York Times reported that Fannie Mae will change its down payment restrictions, allowing those who purchase a home to completely cover its minimum 5 percent down payment with a financial gift or a grant from a nonprofit organization. In the past, those types of funds could only be used to supplement cash directly from the buyer, who would have to entirely cover the 5 percent down payment themselves.

Experts say the new rules could mean more parents gifting their children with some cash in order to facilitate their relocation into a new home. At the same time, it could also help older buyers looking to upgrade their home by allowing them some flexibility in the upfront costs.

"This is definitely going to help upgrade buyers and young couples who for whatever reason don't have enough money and are getting some from their families," broker Edward Ades told the Times.

That represents a significant chunk of first-time buyers. According to the National Association of Realtors, 27 percent of them used a gift to help cover their down payment this year.
 

More News