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Can I use a financial gift from a friend or relative when buying a home?

Q. Can I use a financial gift from a friend or relative as a down payment on buying a home?

A. Yes. In fact, one out of four first-time homebuyers uses a gift to make the down payment.Tax law allows gifts of up to $14,000 a year without tax consequences to the giver or recipient. (The financial gift when buying a homeamount may be adjusted annually so check IRS publication 950 for the current figure.)

You could get a gift from two parents or two friends (for $28,000) without paying a gift tax.Using a gift for a down payment allows you to buy the home even if it’s not Federal Housing Administration (FHA)-approved.

The best advice is to contact a well-connected REALTOR® and discuss this subject before you start looking for homes.

For more information and some tips to avoid costly mistakes when buying a home, read my Free Consumer Report called “4 Quick Ways To Buy A Home With Little Down.”