What Are Gift Funds?
Gift Funds: Money given to you, usually by family, to help with a down payment or closing costs.
Gift funds are money given to a homebuyer, with no expectation of repayment, for the down payment or closing costs.
Who can give
- Conventional: relatives, domestic partners, fiancés and some others
- FHA: relatives, employers, close friends with a documented relationship, unions and charitable organizations
- VA and USDA: generally allowed from people without an interest in the sale
The seller, a real estate agent or anyone else with a financial stake in the sale can't provide a gift.
How to document it
- A signed gift letter
- Proof the donor had the funds, such as a bank statement
- Proof of transfer: a wire receipt or deposit into your account or to escrow
Good to know
- For a primary home, conventional, FHA, VA and USDA loans let the gift cover the entire down payment in many cases.
- Gifts generally aren't allowed for investment properties.
- Donors over the annual federal gift exclusion may need to file a gift tax return, though tax is rarely owed.