Gift funds: the paper trail that actually clears underwriting

Gift funds stall more Richmond files than credit scores do. Not because gifts are disallowed, but because the money arrives before anyone explains how it has to arrive, and unpicking a commingled deposit takes days that a 30-day lock does not have.

The rules themselves are straightforward. It is the sequence that matters.

Who may give

On a conventional purchase of a primary residence, the donor must be a relative by blood, marriage, adoption or legal guardianship, or a fiancé, fiancée or domestic partner. The entire down payment may be gifted. There is no minimum contribution from your own funds, which surprises most first-time buyers.

FHA is broader. Relatives, employers, labour unions, charitable organisations, government agencies and, with heavier scrutiny, a close friend with a clearly defined interest in the borrower. VA is broader still: anyone without an interest in the sale of the property. In every case the donor may not be the seller, the builder, the agent or anyone else being paid in the transaction.

Investment property purchases may not use gift funds at all, on any agency programme.

The gift letter

• Donor's full legal name, address and telephone number
• Donor's relationship to the borrower, stated explicitly
• The exact dollar amount
• The date the funds were or will be transferred
• The complete property address
• A clear statement that no repayment is expected or implied, in any form
• Signatures of both donor and borrower

The line that comes back most often is the relationship. A letter that says 'from Susan Halloway' without specifying that Susan is the borrower's aunt will be returned, every time, and the return costs two days.

The paper trail

Underwriting needs to see the money leave a documented account and arrive in a documented account. That means the donor's bank statement showing the funds present before the transfer, evidence of the transfer itself as a wire confirmation or cancelled cheque, and your statement or deposit receipt showing the exact amount landing, matching to the cent.

Two practical rules. Deposit the gift on its own, never mixed with a payroll deposit or another transfer in the same transaction, because a combined deposit has to be broken apart with documentation for every component. And if the donor is willing, the cleanest route of all is a direct wire from the donor to the settlement agent, so the funds never touch your account and there is nothing to season.

Seasoning, and why sixty days is the magic number

Funds that have sat through a full sixty-day statement period are considered seasoned. They need no sourcing and no explanation. Anything newer than that has to be sourced, meaning you show where it came from and that it was not borrowed.

A large deposit is generally any single deposit exceeding half of your monthly qualifying income. Transfers between your own accounts are simple to explain. Unexplained deposits are the most common reason a file sits in underwriting for an extra week.

Physical cash cannot be used at all, at any amount, on any agency programme. There is no workaround, no letter and no exception. If you have been saving currency at home, deposit it and let it season for at least sixty days before you begin the process. Cryptocurrency follows a similar path: liquidate to dollars, document the exchange sale and the transfer, then season the proceeds.

The cleanest gift is one the donor wires straight to the settlement agent, because a dollar that never lands in your account never has to be seasoned.

If a gift is part of your plan, tell me in the first call rather than in week three. Sequencing it correctly costs nothing. Fixing it afterwards costs days, and days are what lock extensions are priced in.