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Do’s and Dont’s of Homebuying with Gift Funds

Joel Weiser / Jul 14, 2022 / Expert Articles

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Today, I want to talk to you all about gift funds. Hi, my name is Joe Weiser. I am a loan officer here in New York. A gift fund can only be given on an owner-occupied transaction or when you buy a second home, and cannot get a gift when you buy a piece of property. So this is really important. When you buy a house or even when you refinance, who can be the donor?

A donor needs to be related to you by blood, by marriage, or adoption. This is true with conventional. If someone is doing an FHA loan, a cousin is not a donor. They want to see how it went out from the donor's account, went into your account, or it went into the title company's account, or your attorney, or in the escrow account, and they'll have it for you at closing.

They would want to see a clear check from the donor, it has a donor's information on there. So it shows whose check it is, and that it went out of this account. If it goes into your account, they would want to see it in your account. If it goes into an escrow account, they would want to get a letter from the title company or attorney that they received the forms for this transaction.

Also needed: there's a standard gift letter. It says who the donor is, for whom they're donating, what their relationship is, where the money is coming out from, etcetera, signed by the donor and by the borrower. FHA wants to see the bank statement from the donor. If the donor doesn't want to release that this can be a problem with FHA, and this is true for conventional as well.

As long we can source it, it does not need to be in your account, even though you go to give two bank statements. The gift funds does not need to be in your account for two months. As long we can source everything, it does not need to be two months in your account.

If you have any questions, anything else you would like to know about gift funds or anything else mortgage related, reach out to us at the Find My Way Home network, and we'll answer your questions.

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Joel Weiser

Hi, I'm a mortgage expert living in New York. I am also licensed to help with your home loan in several other States across the Country. Do you have mortgage questions? How can I help? View Profile

Joel Weiser NMLS # 1509389 Loan Officer 7016 Fort Hamilton Pkwy Brooklyn, NY 11228 (917) 539-7704 joel.weiser@findmywayhome.com

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About Joel Weiser

Hi, I'm a mortgage expert living in New York. I am also licensed to help with your home loan in several other States across the Country. Do you have mortgage questions? How can I help?