Gifts and Bank Statements

When you’re going through a mortgage, one of the most common areas of confusion is how bank statements, seasoning, and gift funds are handled, especially when comparing Fannie Mae and Freddie Mac.

The truth is, they are very similar… but the small differences can make a big impact on how smooth (or stressful) the process feels.

Let me break it down in a simple, real-world way. 

Bank Statements & Seasoning
In most cases, both Fannie Mae and Freddie Mac require:

• Two months of bank statements
• All pages included (even blank ones)
• Documentation for any large or unusual deposits

This is what we call "seasoning”, showing that funds have been in your account long enough to be considered stable and sourced.
Where things get interesting is that:

• Fannie Mae (DU) will sometimes allow reduced documentation (like one month) if the overall loan profile is very strong and the system findings support it
• Freddie Mac (LPA) tends to be more consistent in requiring the full two-month history.

That said, this is not a fixed rule; the automated underwriting system and the overall strength of the file drive it. 

How Gift Funds Work

Both Fannie Mae and Freddie Mac allow gift funds for down payment and closing costs, typically from family members.
In general, both require:

• A gift letter
• Proof of transfer of funds
• In many cases, documentation showing the donor can give the gift

Where the difference shows up:

• Fannie Mae can sometimes be more flexible if the funds are already in the borrower’s account and the file is strong
• Freddie Mac more consistently requires a full paper trail, including donor documentation. 

What If the Gift Comes Directly to Escrow?
This is a great question, and a very common misconception.
Even if the gift funds are wired directly from the donor to escrow:

You still typically need:

• A gift letter
• Documentation of the donor (and often their ability to give)
• Proof of the transfer

For both Fannie Mae and Freddie Mac.
Sending funds directly to escrow can reduce some documentation requirements (e.g., by avoiding deposit sourcing in the borrower’s account). Still, it does not eliminate the need for a gift letter or proper documentation. 

The Big Takeaway
Fannie Mae and Freddie Mac don’t differ as much in the rules themselves; they differ in how strictly and consistently those rules are applied through their systems.
That’s why:

• One loan might get approved with minimal documentation
• While another (very similar scenario) requires a full paper trail 

Final Thought
This is where experience really matters.
Knowing when to use Fannie Mae vs. Freddie Mac - and how to structure things like assets and gift funds properly - can be the difference between a smooth closing and weeks of back-and-forth.
If you ever have questions about how your funds will be viewed, it's always better to structure it correctly up front rather than fix it later. 

Interest Rates

Rates are looking better again today.  We have picked up some of the losses of March and now we have to work on the first 15 days or so to get back to where we were prior to the start of the war. 

Loan Programs Snapshot

• Government loans (FHA/VA/USDA): in the 5s
• Conventional (≤ $832,750): high 5’s / low 6s
• High-balance: mid 6s
• Jumbo: Low to Mid6s
• ARMs: 5s - 6s

Additional options:

• Bank statement loans (10% down+)
• P&L loans (20% down, no bank statements)
• 0% down options (620+ score)
• DSCR loans (15% down)
• Bridge loans (~7.99%)
• Buydowns (3/2/1, 2/1, 1/0)

Rates subject to change without notice.
Condo Update

• Good news: None today
• Bad news: Diamondhead – Stevenson Ranch  –  Fannie doesn't like them right now.  I believe there are some repairs going on due to SB-326.    
• We love your Non-Warrantable Condo loans!!

Need help checking a condo? Call me, and we can look it up in real time.

Also:

Full California "naughty list" available here:

https://mikemeena.com/non-warrantable-condos/ 

Let's Connect! 

If you, or your clients, friends, or family need guidance, I'm here.

📞 661-291-2222 (Direct)

📞 661-714-6258 (Cell)

📞 661-260-2970 ext. 2222 (Office)

📧 Mike@AugustaFinancial.com

Sincerely,