How Do You Use a Gift Fund When Buying a House?

Using a gift when buying a house is a common practice. A gift can be used for the down payment, closing costs, or any other costs associated with purchasing a home. Here are the steps to use a gift when buying a house:

  1. Determine the gift requirements: The lender will have specific requirements for gifts, such as the amount, the source of the gift, and documentation needed. Make sure to ask the lender for the specific requirements and follow them carefully.
  2. Obtain a gift letter: The gift letter is a document that explains the gift and confirms that it is a gift and not a loan. The letter should include the name of the gift giver, the amount of the gift, the date it was given, and a statement that the gift does not need to be repaid. The gift letter should be signed by the gift giver.
  3. Deposit the gift: The gift money should be deposited into the borrower’s bank account before closing. The borrower should keep the documentation of the gift and the deposit for the lender’s verification.
  4. Provide documentation: The lender will require documentation of the gift, including the gift letter and proof of deposit. Make sure to provide the documentation as soon as possible to avoid any delays in the closing process.
  5. Use the gift: The gift can be used for the down payment, closing costs, or any other costs associated with purchasing a home.

Using a gift when buying a house can help reduce the amount of cash needed upfront and make homeownership more accessible. However, it is important to follow the lender’s requirements and provide the necessary documentation to avoid any delays in the closing process.