Using Gift Funds for a Michigan Home Purchase

Ask before money moves

Loan programs differ on eligible donors, required borrower contribution and permitted uses. Tell the lender who plans to give the money, the amount and when it would be available before anyone transfers funds.

Expect a paper trail

The lender may request a gift letter, evidence of the donor's ability to give, and proof of the transfer and deposit. Cash deposits without a traceable source can create delays.

Gift funds do not replace a complete budget

Confirm whether the gift is intended for down payment, closing costs or reserves and whether the program permits that use. Keep repair and emergency savings in view.

A simple planning example

If family intends to provide $8,000, do not wait until closing week. Review the loan rules first, use a documented transfer method and keep copies requested by the lender.

Questions to take to your loan review

• What is the estimated total monthly payment?
• How much cash is needed before and at closing?
• What assumptions could change for this borrower or property?
• How much savings remains after closing?

Plan the paper trail before the transfer

Tell the lender the donor’s relationship, intended amount, source account and timing. Obtain the required gift-letter format and follow the requested transfer method. Keep statements and transfer evidence. Do not describe a repayable family loan as a gift; repayment can affect qualification and must be disclosed. Avoid cash or unexplained deposits that cannot be traced.