- A gift letter, signed by the person giving the money, stating the amount, their relationship to you, and that it never has to be repaid.
- Proof the funds have landed in your account, usually some time before closing. Lenders differ on exactly how long, so ask early.
- A family relationship. For insured mortgages (under 20% down), the gift generally has to come from an immediate family member.
Gift or loan? Be honest about it. If the money is really a loan you'll pay back, it isn't a gift, and lenders count repayments as debt when they qualify you. Calling a loan a gift puts the mortgage at risk.
Worth discussing with a lawyer. If you're married or common-law, a gift from your side of the family can be treated differently from your joint money if the relationship ever ends. Some families also want to formalize the gift in writing. A lawyer can set this up properly, and it's far easier to do before closing than after.
Christian's take: Gifts are a very common way for parents to help their kids into the market. The devil is in the details: there's a right way of doing it, and timing matters, so have that conversation with your mortgage professional early.
