money for a down payment
Some couples today are breaking away from the traditional
china, silver and linen gift registries when it comes to asking
for wedding gifts. They're asking for money.
A wedding-day cash infusion can make it easier to
put a down payment on a home. With home prices appreciating rapidly
in much of the country, lots of couples need all the help they can
There are formal and informal rules governing gifts
of money to help newlyweds buy a house. First, the informal rules:
Is it OK to ask one's wedding guests for money?
"It's not rude to request money as a wedding
gift," says Peggy Post, author of "Emily
Post's Wedding Etiquette." "However, it's extremely
important to ask politely."
Peggy Post is Emily's great-granddaughter-in-law,
the wedding etiquette expert for WeddingChannel.com and the main
spokeswoman for the Emily
Post Institute. She says one of the most common challenges that
couples face is how to request money as a wedding gift. Doing so
is acceptable, if done politely.
If you seek down-payment money, get the word out
through family and friends, Post recommends. Just don't include
that info in the same envelope as a wedding invitation.
"If you are asked point-blank what you
would like for a gift, you might say, 'Whatever you choose will
be wonderful, I'm sure, but money for a house down payment is on
the top of our wish list,'" Post says.
It's OK to say what it's for
Go ahead and tell people what you want the money for. Who knows?
If you let people know that you plan to spend the money on a down
payment, rather than on a honeymoon in Tuscany, they might be more
willing to open their pocketbooks.
Wedding guests who insist on giving you yet another
toaster or wicker picnic basket or a set of rosewood corn holders
should be thanked anyway, even though they aren't helping you buy
"You should always accept any gift graciously,
and remember that the choice of what to give really belongs to the
gift giver," Post says.
With the etiquette question out of the way, that
brings up how to get the money from your guests' pockets and into
the hands of the folks who eventually sell you their house. It's
not simple, because mortgage loan programs have differing rules
on the use of gift money in making a down payment.
The rules on using gift money
Generally, you are expected to be able to make a down payment of
at least 5 percent from your savings, excluding gifts. But what
if you are too impatient to wait that long? Some mortgage programs
allow you to use gift money if you can't scrape together enough
for a 5 percent down payment.
Loans insured by the Federal Housing Administration
allow you to use money from gifts to make a down payment of as little
as 3 percent. Fannie Mae and Freddie Mac, the two biggest purchasers
of home loans, offer similar programs through lenders. Fannie Mae's
"Flexible 97 mortgage," for instance, lets you pay 3 percent
of your home's purchase price as your down payment, which can come
from gifts. Freddie Mac's "Affordable Gold" and "Alt
97" programs also allow a percentage of the down payment to
come from gifts donated by relatives.
If there is a problem with these loan programs, it
is that they limit who you can accept money from. The FHA, Fannie
and Freddie allow family members to give you money.
What about friends? Can you use gift money from,
say, the woman who has been your mother's best friend since kindergarten?
Technically, no. The money has to come from family (or from a nonprofit
or government agency, but they don't give wedding gifts).
It wasn't always this way. In 1996, the FHA encouraged
lenders to offer "bridal registry accounts," where couples
could stash gifts from friends and family. "Then, when the
newlyweds purchase their new home, the money will be available and
documented through a lender-supervised account," the FHA said.
A few lenders responded enthusiastically, establishing
account programs specifically for newlyweds complete with gift cards
that could be returned to the bank with a check enclosed.
One such lender is SunTrust Mortgage, a subsidiary
of SunTrust Banks Inc. Through SunTrust Mortgage, you can open a
bridal registry savings or checking account at SunTrust Bank. When
a wedding guest makes a deposit, the bank sends a card to the bride
and groom to let them know.
"When they're ready to go ahead and make
that first home purchase, they access those funds and we get a mortgage
for them -- and we hope they remain a SunTrust banking customer,"
says Cheryl Nolda, senior vice president of marketing for SunTrust
Despite their success at SunTrust, bridal registry
accounts never really caught on. You can always open a regular old
savings or money market account to hold your down payment fund.
You might need to document where the money came from. That's easy
enough when the money comes from your paycheck. If some of the money
comes from gifts, be prepared to document whom it came from. Encourage
gift-givers to give checks from their personal accounts.
And don't forget to write those thank-you notes.
Editorial assistant Leslie Hunt contributed to