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Question about Homepath Mortgage down payment sources.

Good day all,
I am currently in the offer stage on a Homepath property. 
I am lucky enough to be receiving a 20,000 gift from my in-laws towards the purchase/remodeling of our new home.

My lender said that because a homepath mortgage loan is considered a conventional product we would be responsible for providing at least 5% of the down payment out of our own seasoned funds.  Our plan initially was to put 10% down (well over the 5% required) on the 125,500 price of the home.  We planned to use the gift funds for simplicity and then pay closing cost/remodeling out of our own savings.  While we can make the 5% work out of our own funds, it certainly complicates matters. 
I can not find any information that verifies his statement anywhere else.  Every piece of documentation that I've been able to locate says that the down payment can come from multiple sources. (gifts, employer, etc etc)  I plan on contacting him tomorrow to see if he can further clarify but wanted to see if I could obtain any additional information prior to that conversation so I would be better educated. 
Is this just a case of a poorly publicized down payment gift limit on the product or a misunderstanding by my lender?
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February 11 - US
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Answers (7)

You can do a Homepath loan with a gift for the whole down payment, that may be an overlay with the lender you are working with. Inbox my profile for additional information. Thanks!
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February 13
Your lender is likely referring to PMI overlays. As this is a homepath loan, there is no mortgage insurance so it does not apply. Recently, many PMI companies have waived this requirement as well. I think it is a case of your lender not knowing the details of the product he is offering. 
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February 12
Fannie Mae does allow 100% gift funds, so as long as you can fully source the gift, this won't be an issue. 
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February 12
Profile picture for DitchDoc
I appreciate all the information everyone.  I just wanted to be sure that I wasn't misinterpreting the information I was reading.  I will be speaking with my lender tomorrow and I have contact put in with an additional lender that i will be contacting tomorrow to compare rates.

Once again, thanks everyone.
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February 11
It used to be 5% from own funds, but you can receive 100% gift from a relative towards down payment/closing costs. I think the lender may have made an error.
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February 11
It could be a misunderstanding by your current lender that you are using.  For a Fannie Mae home path loan a minimum borrower contribution from the borrower is not required.  All funds to complete the transaction can come from gift funds. 

Your doing the right thing by inquiring but it also gives you an opportunity to shop your loan around as well.
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February 11
That's an overlay that lender has. I can do the entire down payment being a gift. What state is the property?
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February 11
 
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