HUD Articles

Using a gift to purchase.  If a home buyer is planning on receiving a gift towards their down payment or closing costs, then the lender needs to know the source of these funds.

This can be shown in 3 ways.  A gift letter stating that the donor is not expecting repayment.

Or evidence that the gift donor has the gift funds available, this usually is provided by a bank statement. And finally, evidence that the funds have already been transferred to the borrowers aqccount

FHA loans have special requirements.  Only family members are allowed to provide a gift.  The specific list is :

spouse, domestic partner, children,parents, grandparents, siblings, aunts, uncles and inlaws.  Cousins are excluded from this list.

And finally Investment purchases:  A buyer cannot be gifted any portion of their downpayment, closing costs, or reserves.  If someone else is needed to cover any portion of these funds that party will also need to be on the mortgage.