What is Gift Funds?
Gift funds are money given by a relative or approved donor to help a homebuyer with down payment or closing costs, usually requiring a gift letter.
Gift funds are monetary gifts from a family member, friend, or other approved source used toward a down payment or closing costs. Borrowers encounter them when they lack sufficient savings but have generous relatives. Lenders require a gift letter stating the amount, donor's relationship, and that repayment is not expected. Watch for documentation requirements, such as proof of transfer and donor's ability to give. Some loan programs restrict who can provide gifts and what percentage of funds can be gifted. Gift funds must be sourced and seasoned in the borrower's account before closing.
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