Can I Use Gift Funds For A Mortgage?

On April 2, 2015

Categories: Mortgage/Financing

gift funds for your mortgage

What are gift funds?

Money that friends or family give that you use for your down payment.

In the process of getting a mortgage, there are steps that all underwriters take to verify the source of the funds you are giving for your down payment. Are they all coming from one account? Have you saved them over time or just receive them in the last 60 days? These are questions they will ask. And depending on how much income you make, what percentage of your income your down payment represents AND the scrutiny of the underwriter you may be asked to produce documentation for gift funds.

But there is not a hard and fast rule on gift funds. In fact in a recent article in the Washington Post, Lawrence Yun, the chief economist for the National Association of Realtors argued that family and friends gifts should be treated as your own money.

NAR’s view is that regulations on home loan underwriting should be relaxed modestly along with rules about using gift money for down payments, Yun says.

“We agree that gift funds from outside groups or from builders who have an incentive is wrong, but gifts from family members who want to invest their savings in a home for their children should be treated as if it is the same as the buyer’s money,” he says.

But here are the basics you need to know about using gifts for your down payment.

If there is a large single donation you may be asked to produce a gift donation letter.

According to Quicken Loans, it’s “any single deposit that exceeds 50% of the total monthly qualifying income.” This details the person whom the funds came from and states it was a gift not a loan, includes the amount etc. Here is a full list from Quicken Loans of what you should include in a gift letter.

Gift money regulations can be different depending on what kind of loan you get.

VA loans are different than FHA and traditional.

The timing of when you received the money matters.

If you received it within the last 60 days is usually the time period they look at.


Gift money regulations will vary depending your personal income, situation and the bank you are getting your mortgage from. For more details on your specific situation we advise that you seek the help of a mortgage professional.