The proper documentation for FHA gift funds is critical to the FHA mortgage process. The mortgage industry
places a great deal of emphasis on establishing a formal paper trail of the gift (otherwise known as
source of funds) so it is very important that you review and understand the requirements below.
Furthermore, gift funds must be received from a relative, not a friend or acquaintance.
PLEASE NOTE that the required documentation will differ depending on whether you have already received the gift or will receive the gift at a future date prior to closing or settlement.
Gift Funds Yet To Be Received:
- Provide executed gift letter. If you have applied for a FHA loan, the FHA Certification section must be signed by both the gift donor and the recipient acknowledging the warning stated in that section. FHA loans do not require notarization of the borrower’s signature.
- The gift must be in the form of a cashier’s check or certified check or wire. The donor’s name must be printed on the check. A Cashier’s check is preferred. None of the gift money can be received in cash from the gift donor.
- Make a copy of the gift check front and back clearing your bank account.
- FHA ONLY – Donor’s ability must be verified by receipt of a copy of their most recent bank statement. Any large deposits will need to be explained and documented. The donor cannot have borrowed the gift funds thru an unsecured loan.
Gift Funds Already Received:
- Provide executed gift letter. If you are applying for a FHA loan, the FHA Certification section must be signed by both the gift donor and the recipient acknowledging the warning stated in that section. FHA loans do not require notarization of the borrower’s signature.
- Provide, signed and dated gift letter from the gift donor, a copy of the front and back of the canceled gift check or a copy of the gift donor’s full bank statement evidencing the withdrawal amount matching the actual gift amount.
- Make a copy of the gift check front and back clearing your bank account.
- FHA ONLY – Donor’s ability must be verified by a copy of the most recent bank statement. Any large deposits will need to be explained and documented. The donor cannot have borrowed the gift funds thru an unsecured loan.
