You (Yes You) Can Use Gifts to Get a Mortgage

by Rachel Jett

During the holiday season, we all think about giving presents to those we love and care about. What better gift is there than helping a family member purchase a home? Yes—that's really possible (even on the smallest gift giver budget)!

Gift funds can be used to help with the purchase, down payment, or reserve funds to help a family member make that purchase without spending (or borrowing) more than is in their budget. This can be a very meaningful gift to a first time homebuyer who will always have expenses with a move and can be a huge help in getting someone you care about out of a rental and into their own home.

Parent giving adult children a Christmas gift


Absolutely! Just about all mortgage programs will allow for gift funds to be used to assist with the purchase of a new home as long as it is your primary residence. Just like any other part of the mortgage approval process there will be some paperwork needed – your loan officer can talk you through the specifics there.


The easy answer is anyone related to you or with a documented interest in you as the borrower, can gift money for a down payment on a home!

Examples would be a relative, spouse or fiancé, an employer, a close friend with a clearly defined relationship, or a governmental agency or public entity (some of the first time home buyer or low income programs would fall into this category). As long as the relationship is documented in a legitimate way gifts should be allowed.

The only exception would be anyone with an interest in the transaction – you cannot receive gift funds from a realtor, builder, developer, or anyone else involved with the transaction.Giving the gift of home ownership this Christmas


Just like any other part of a mortgage transaction there will be documentation required. A gift letter must be completed by both the borrower and the donor with all the relevant information. The funds will need to be shown available in the donor’s account and proof will be needed once those funds are deposited. The purpose there is to make sure that the gift is truly being given by someone who was able to give the money away, that the funds came from an acceptable source, and no repayment is expected.

The person giving the gift can expect a call from the underwriter or compliance department just to verify everything. Typically the lender will ask for a bank statement showing those funds prior to the gift being given.

Regardless if you'll be using gift funds for a down payment, your own savings, or one of Ruoff Home Mortgage's 0% down programs, we're here to help you reach your homeownership goals.

Get started by downloading our FREE Home Shopping Guide now!

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