Money given to a homebuyer by a family member or other eligible donor to help with the down payment or closing costs.
Full Definition
Many loan programs allow buyers to use gift money toward a down payment and closing costs, but lenders require documentation to confirm the funds are truly a gift and not a loan. A gift letter signed by the donor must state the donor's name, relationship, amount, date, source of funds, and that repayment is not expected. Lenders also typically require proof that the money has been transferred — either a bank statement showing the deposit or a certified check. Conventional loans allow gifts from family members; FHA allows gifts from a broader range of sources including employers and nonprofits. Gift funds generally cannot be used for investment property purchases.
Related Terms
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