When are Gift Funds Allowed?

The gift donor may not be a person or entity with an interest in the sale of the property, such as:

  • the seller
  • the real estate agent or broker
  • the builder, or  an associated entity.

Gifts from these sources are considered inducements to purchase, and must be subtracted from the sales price.

Lenders responsibility for verifying the acceptability of the gift.
Regardless of when gift funds are made available to a borrower, the lender must be able to determine that the gift funds were not provided by an unacceptable source, and were the donor’s own funds.

When the transfer occurs at closing, the lender is responsible for verifying that the closing agent received the funds from the donor for the amount of the gift, and that the funds were from an acceptable source.