What Are Gift Funds and How to Handle Them

When buying a home gift funds are funds given to the buyer by any blood related member of the family or a fiancee, domestic partner for the purpose and being used for the purchase of a home.  The donor can not be affiliated to the builder, developer, real estate agent, or any other person involved in the transaction of the purchase of the home.

FHA and Conventional Guidelines differ so it is important to look under the loan you are planning to use. (Your lender can give you that information)

FHA Guidelines   (Items Needed)

1.  Gift Letter

2. Documentation of the donor's ability to gift:

• Provide donor's bank statement showing name of donor, account number, and balance.     (Bank statement must be unaltered no whiteout or erasers) 
• Or, provide a letter from the donor's bank verifying available assets.  Letter to include ALL of the following information:
• Name on account
• Account Number
• Verification of sufficient funds to cover the amount of gift

3.  Document transfer of gift funds from the donor to the borrower.  (Cash withdrawals/transfers are NOT considered allowable funds)

      Deposit into bank account:

• If you deposit into a bank account:  A copy of the cashier's check or cancelled personal check reflecting name of donor, borrower and bank account number shown on the gift letter or evidence of withdrawal from donor's bank account. 
• Copy of the deposit slip for the gift and bank receipt showing deposit and available balance (OR)

      Deposit directly to escrow:

• Copy of cashier's check reflecting name of donor, borrower and bank account number shown on the gift letter.
• Copy of deposit into escrow  (OR)
• Funds wired directly into escrow from donor's account designated on gift letter
• Copy of the wire transfer

Conventional Loan Guidelines:

1.  Gift Letter

2. Document transfer of gift funds from the donor to the borrower (Cash withdrawals/transfers are NOT considered allowable funds)

       Deposit into Bank Account:

• Copy of cashier's check or cancelled personal check reflecting name of donor, borrower, and bank account number shown on the gift letter or evidence of withdrawal from donor's bank account.

• Copy of the deposit slip for the gift and bank receipt showing deposit and available balance  (OR)

      Deposit directly to escrow:   Same as above                  

                             

                                                    Information Provided by Vitek