Gift Funds

  • Gift funds must be gifts with no expectation of repayment.
  • A gift can be provided by a relative, defined as the borrower's spouse, child, or other dependent, or by another individual who is related to the borrower by blood, marriage, adoption, or legal guardianship; or a fiancé or domestic partner.
  • Multiple gifts can be provided. 
  • Gift verification depends on the loan type, and how the gift is provided, see below. 
  • We will provide the gift letter once a home is determined.
  • Gift letter must be wet signed by buyer and person(s) gifting funds, (e-signatures are not permitted).
  • We suggest the gift(s) to be wired to the attorney by the family member(s) providing the gift(s).  We will provide wiring instructions. 
  • Gift funds are not allowed on investment properties.

CONVENTIONAL

  • Verify that sufficient funds to cover the gift are either in the donor's account or have been transferred to the borrower's account. Acceptable documentation includes any of the following:
    • When the funds are not transferred prior to settlement, document that the donor gave the closing agent the gift funds in the form of a certified check, a cashier's check, or other official check.
    • A Closing Disclosure showing receipt of the donor's check
    • A copy of the donor's check to the closing agent
    • A copy of the donor's withdrawal slip and the borrower's deposit slip
    • A copy of the donor's check and the borrower's deposit slip

  FHA & VA

  • Acceptable Donors
    • The borrower's family member
    • The borrower's employer or labor union
    • A close friend with a clearly defined and documented interest in the borrower
    • A charitable organization
    • A governmental agency or public entity that has a program providing homeownership assistance to low or moderate income families or first-time homebuyers.
    • Only family members may provide equity credit as a gift on property being sold to other family members.
    • Surplus gift funds may not be considered as cash reserves.
  • Donor's source of funds
    • Cash on hand is not an acceptable source of gift donor funds. If the gift funds are being borrowed by the donor and the documentation from the bank is not available, the donor must provide written evidence the funds were borrowed from an acceptable source, not from a party to the transaction.
  • Required Documentation
    • Gift letter
    • Verify and document the transfer of gift funds from the donor to the borrower as follows:
      • If the gift funds have been verified in the borrower's account, obtain the donor's bank statement showing the withdrawal and evidence of the deposit into the borrower's account.
      • If the gift funds are not verified in the borrower's account, obtain the certified check or money order or cashier's check or wire transfer or other official check, and a bank statement showing the withdrawal from the donor's account. If the gift funds are paid directly to the settlement agent, verify that the settlement agent received the funds from the donor for the amount of the gift.
      • Regardless of when gift funds are made available to a borrower, a reasonable determination that the gift funds were not provided by an unacceptable source and were the donor’s own funds, must be made. Bank statements from the gift donor are always required.

 USDA

  • Acceptable Donors
    • The borrower's family member
    • The borrower's employer or labor union
    • A close friend with a clearly defined and documented interest in the borrower
    • A charitable organization
    • A governmental agency or public entity that has a program providing homeownership assistance to low or moderate income families or first-time homebuyers.
  • Surplus gift funds may not be considered as cash reserves.
  • Donor's source of funds
    • Cash on hand is not an acceptable source of gift donor funds. If the gift funds are being borrowed by the donor and the documentation from the bank is not available, the donor must provide written evidence the funds were borrowed from an acceptable source, not from a party to the transaction.
  • Required Documentation
    • Gift letter
    • Verify and document the transfer of gift funds from the donor to the borrower as follows:
      • If the gift funds have been verified in the borrower's account, obtain the donor's bank statement showing the withdrawal and evidence of the deposit into the borrower's account.
      • If the gift funds are not verified in the borrower's account, obtain the certified check or money order or cashier's check or wire transfer or other official check, and a bank statement showing the withdrawal from the donor's account. If the gift funds are paid directly to the settlement agent, obtain a wire transfer confirmation to verify the settlement agent received the funds from the donor for the amount of the gift.
      • Regardless of when gift funds are made available to a borrower, a reasonable determination that the gift funds were not provided by an unacceptable source and were the donor's own funds, must be made.