Using Gift Funds for Your Arkansas Down Payment

What lenders require

Most mortgage programs allow gift funds for down payment and/or closing costs. What they require:

• Gift letter stating the amount, the giver’s relationship, that repayment is not expected
• Source documentation — donor’s bank statement showing the funds
• Transfer documentation — the actual wire or check

Who can give

Generally a relative, domestic partner, fiancé(e), or (in some programs) an employer. Unrelated third parties typically cannot gift down payment.

Program variations

Conventional loans with less than 20% down require 5% of the down payment to come from the borrower’s own funds unless the loan is one of the first-time-buyer programs. FHA and VA have no such minimum — 100% of funds can be gifted in most cases.

Tax implications

The donor may need to file a gift tax return (Form 709) for gifts over the annual exclusion. The borrower does not report received gifts as income.