I’m Michael DiVita — DRE #01372066 | NMLS #241655, DiVita Home Finance (DRE #01818285 | NMLS #323700), Tiburon, CA. I’ve been in California mortgage lending since 2000 and founded DiVita Home Finance in 2007. Inheritance down payments come up regularly — the documentation path is straightforward once you know what’s needed. Call (800) 239-1103.
Receiving an inheritance is often the event that makes homeownership possible for Californians who could not otherwise assemble a down payment in a high-cost market. The good news: inheritance funds are treated as the borrower’s own money — not a gift — once they clear probate and are documented.
How Lenders Treat Inherited Down Payment Funds
If the inheritance has already been distributed and the money has been in your bank account for 60 days or more, it is considered “seasoned” and requires no additional documentation beyond your bank statements. The source is effectively invisible to the lender.
If the inheritance is recent (less than 60 days seasoned), you will need to document the source. Required documentation typically includes: a copy of the will or trust document, the death certificate, and the estate distribution letter showing the amount you received.
Inheritance in Probate
If the estate is still in probate and you have not yet received your distribution, lenders cannot count the funds until they clear. However, you can use the will and probate documentation to show a pending inheritance as part of a letter of explanation, and some portfolio lenders will consider pending distributions as reserves (not income). The key is timing — if probate is close to resolution, it may make sense to wait 60 days post-distribution before applying to avoid the extra documentation burden entirely.
Trust Distributions
If the inheritance comes through a revocable or irrevocable trust, you will need the trust document, a trustee letter confirming the distribution, and evidence the funds moved to your personal account. Trust income (regular distributions) can also count as qualifying income if it is documented and expected to continue for at least 3 years.
California Inheritance Tax
California has no state inheritance tax. Federal estate tax applies only to large estates above the federal exemption threshold — most California inheritance recipients owe nothing on inherited funds, making this one of the cleanest ways to access a down payment. Consult a CPA for your specific situation.
Frequently Asked Questions — Inheritance Down Payment California
Can I use an inheritance as a down payment to buy a California home?
Yes — and inheritance funds are treated more favorably than gift funds. Once inherited money is in your bank account and has been seasoned for 60 days, it’s treated as your own money with no additional documentation required. If the funds are newer than 60 days, you document the source with the will, death certificate, and distribution letter. Unlike gift funds, there’s no gift letter required, no donor verification, and no restriction on using 100% of the down payment from inheritance. This is one of the cleanest down payment sources a California buyer can have.
What if my inheritance is still in probate — can I use it for a mortgage?
If the estate is still in probate and you haven’t received your distribution, lenders typically can’t count those funds toward the down payment yet — the money isn’t in your hands. Once the probate closes and funds are distributed to you, a 60-day wait makes them “seasoned” and fully usable with no extra documentation. Some portfolio lenders will consider a pending distribution as documented reserves if you can show the will, the estate value, and your share — but this is lender-specific and not universal. The safest approach is to let probate close, receive your distribution, wait 60 days, then apply.
Do I have to pay California taxes on inherited money used for a down payment?
California has no state inheritance tax, so inherited funds are not subject to California income tax. Federal estate tax applies only to very large estates above the federal exemption, which means the vast majority of California inheritance recipients owe nothing. Money you receive as an inheritance distribution is generally not income — you’re receiving property or assets, not compensation. The down payment itself isn’t a taxable event. Consult a CPA if you have questions about your specific estate size or any income generated by inherited assets before distribution.
Talk to Michael Directly
DiVita Home Finance | Tiburon, CA | In lending since 2000, founded DiVita Home Finance in 2007. Michael DiVita DRE #01372066 | NMLS #241655. Company DRE #01818285 | NMLS #323700.
💬 Text: (310) 849-9124
