If someone is helping you with funds for your home purchase, you’re not alone. Gift funds are a common way buyers in Texas—especially first-time buyers in Dallas—get a little extra support to close the deal. But there are specific rules. Lenders require clear documentation, and it’s important to handle everything the right way to avoid hiccups in your mortgage process.
Whether you’re buying your first home in Dallas, moving to a second home in Austin, or relocating to Texas from another state, here’s everything you need to know about using gift funds for your mortgage.
We are not Uncle Sam and it is not our responsibility to report anything to the IRS. Likewise, the IRS is not involved during the mortgage process – only parties interested in originating and servicing the loan will have access to the loan’s information.
What Are Mortgage Gift Funds?
Gift funds are exactly what they sound like: money given to you by someone else, without the expectation of repayment, that can be used for a down payment or closing costs.
To qualify as a gift, the money must:
- Be given freely with no expectation of repayment
- Be documented properly through a gift letter and bank statements
- Come from an acceptable donor (more on that below)
This includes money from parents, grandparents, close friends, or even employers in special situations. If someone wires $10,000 to your account a week before closing, and that person isn’t on the loan, you must be able to document it properly—or it could delay or derail your home loan approval.
When Is Money Considered a Gift?
Here’s a good rule of thumb: If the money didn’t come from your paycheck, savings account, or a verified asset, your lender will want to know where it came from.
Even if your spouse is the one giving you money—but they’re not on the loan—it’s considered a gift and must be documented. One way around this? Combine accounts at least 90 days before applying, so the funds are seasoned.
When Is Money Considered a Gift?
Here’s a good rule of thumb: If the money didn’t come from your paycheck, savings account, or a verified asset, your lender will want to know where it came from.
Even if your spouse is the one giving you money—but they’re not on the loan—it’s considered a gift and must be documented. One way around this? Combine accounts at least 90 days before applying, so the funds are seasoned.
Who Can Give Gift Funds?
Rules differ by loan program, but in general, acceptable gift donors include:
- Parents and step-parents
- Children and stepchildren
- Siblings
- Grandparents
- Fiancés and domestic partners
- Close friends (when a documented relationship exists)
- Employers (under certain relocation packages)
- Churches or nonprofit organizations (rare, but possible)
In Texas, it’s especially common for family members to help out with down payments for first-time buyers or young professionals buying their first home in hot markets like Dallas, Frisco, or Plano.
Can a Gift Come from a Business or Church?
Yes, but it’s rare. If you’re receiving gift money from an entity—like your employer or church—you’ll need to show that there’s a legitimate relationship and no ties to the transaction. For example, your company might give you a $5,000 relocation allowance that’s not listed as income. This may qualify as a gift with proper documentation.
When Gift Funds Are Allowed (And When They’re Not)
Gift funds are usually allowed for:
- Primary residences
- Second homes
They are not typically allowed for investment properties. If you’re purchasing an investment property in Texas with conventional financing (Fannie Mae or Freddie Mac), you must use your own funds for the down payment.
Some jumbo and non-QM loans (non-qualified mortgages) allow gift funds but require that the borrower contribute a portion of their own money—often 5% to 10%.
Best Practices for Using Gift Funds in Texas
1. Tell Your Lender Early
Before your donor hits “send” on that transfer, give your loan officer a heads-up. It’s much easier to structure the transfer properly than to fix it later.
2. Use a Direct Wire to Title Company
The cleanest, easiest method is for the donor to wire funds directly to the title company on closing day. This avoids unnecessary documentation like donor bank statements or deposit receipts.
3. Avoid Cash
Cash is not traceable. If someone gifts you $10,000 in cash and you deposit it, there’s no paper trail—lenders can’t accept it, and you may have to remove those funds from your qualifying amount.
How to Document Gift Funds
Here’s how to stay compliant and stress-free.
Step 1: Sign a Gift Letter
We’ll provide a template that includes:
- The amount of the gift
- Donor and borrower names and relationship
- Donor’s address and last 4 digits of their account
- A statement confirming there’s no expected repayment
No notarization needed.
Step 2: Provide a Paper Trail
If funds are deposited into your account:
- Get a copy of the donor’s check or wire
- Provide a bank statement showing the deposit
- Include a deposit receipt (only for that transaction)
Tip: Don’t mix deposits. If you’re receiving multiple gifts, do them one at a time.
Step 3: Understand Seasoning
If the gift has been in your account for more than 90 days, it’s considered seasoned, and may not require documentation. If it’s been less than 60 days, full documentation will be required.
FAQs About Gift Funds in Texas
What happens if the gift funds are already in my account?
If the deposit happened recently (within 60 days), you’ll need a gift letter and donor bank documentation. If it’s been over 90 days, the funds are seasoned and no gift letter may be needed.
Can someone repay the donor later?
The letter must state that repayment is not expected. If you repay later on your own, that’s your choice—but there can be no agreement, verbal or written, to repay.
My mom doesn’t want to provide her bank statement. What now?
Then she should wire funds directly to the title company. For conventional loans, we won’t need her bank statement in that case.
What if the donor’s bank account is joint?
As long as the donor has access to the funds, it’s acceptable. We don’t need documentation from the joint account holder.
Special Scenarios
Gift Funds from a Church
We’ve seen small churches donate funds to members for housing—this is acceptable when properly documented. Be sure to have a written explanation of the relationship and the purpose of the funds.
Jumbo Loans in Dallas
With home prices rising in Texas cities, jumbo loans are more common than ever. Some jumbo lenders require borrowers to contribute 10% of their own money before allowing gifts.
Using Multiple Gifts
You can receive multiple gifts from different donors—but each one requires its own gift letter and paper trail. Don’t combine them in a single deposit.
Gift Letter Sample
I/We do hereby certify to the following:
I/We (Donor) have made a gift of $ dollars to the Borrower(s) named below, and no repayment of this gift is expected or implied either in the form of cash or future services of the recipient.
This gift is to be applied toward the purchase of the property located at:
The source of funds for this gift is:
Bank Name: __
Type of Account: [ ] Checking [ ] Savings [ ] Other
Account No.: _
Relationship to Borrower:
Donor’s Name:
Street Address:
City:
State:
Zip:
Donor Telephone: – –
* Donor Signature: Date:____ __
* Borrower Signature (Recipient): Date:_____ __
* Borrower Signature (Recipient): Date:_____ __
* Please Note: Upon the signature(s) of this gift letter, I/We hereby certify that any funds given to the homebuyer were not made available to the donor from any person or entity with an interest in the sale of the property including the seller, real estate agent, broker, builder, or loan officer, or any other entity associated with this transaction.
Final Thoughts on Gift Funds in Texas
Gift funds are an incredible tool—but they come with rules. Whether you’re buying your first home in Dallas, upgrading in Frisco, or relocating to Austin, our team at Mortgage Mark can guide you through every step.
The earlier you loop us in, the smoother the process will be. We’ll help you document everything correctly, avoid surprises, and get your loan approved with confidence.
Have questions about mortgage gift funds in Texas? Contact us today. We’re here to help you close smarter and faster—with no last-minute stress.
Mark Pfeiffer
Regional Sales Manager
Loan Officer, NMLS # 729612
(972) 829-8639
MortgageMark@MortgageMark.com