One of the most integral parts of obtaining a home mortgage loan is proving you have the required funds for your down payment and closing costs. If any of these funds will be in the form of gift to you, then we must document the transfer of funds.
There are specific rules regarding the transfer of funds which require that the gift come from a specific category of donor and then we must create a paper trail of the funds being deposited! 

Step 1:
Discuss with me the amount of gift allowed according to your loan program and who will be giving you the gift. (Typically, the gift must come from a relative, an employer, and for an FHA loan the gift can come from a "concerned" party or a Down Payment Assistance Program, which is currently recognized by HUD). 
If we obtain a gift through a grant, such as the Kansas or Missouri Bond program, then I will help co-ordinate.

Step 2:
I have a "Certificate of Gift" letter. This form needs to be filled out by the person giving you the gift, stating their intention that no repayment of the gift is expected. The donor needs to give you the completed original gift letter along with a cashier's check made out to you , the borrower, in the amount stated in the gift letter.

Step 3:
For purposes of easy underwriting, I HIGHLY recommend receiving your gift as a Cashier’s Check.  To create the paper trail, make a copy of the cashier's check you received. Then deposit the cashier's check into your bank account and obtain a deposit slip that matches the amount stated in the gift letter and the amount shown on the cashier's check.
[Please do not deposit any other funds with your gift or make any withdrawals from this transaction. THE GIFT LETTER, THE CASHIER'S CHECK, AND THE DEPOSIT SLIP MUST MATCH!]
Please note that on FHA home loans, a lender may require further documentation from the donor to prove that the donor has the ability to give the gift, i.e. that the donor has the funds available to give and has not borrowed the funds to give this gift.  If this is needed, I will let you know.

Step 4:
Deliver to Pulaski Bank the original gift letter, copy of the cashier's check and a copy of the deposit slip.
If you have any questions, please don't hesitate to call me at (913) 234-8670.

Click here for Gift Instructions.

A comment regarding Down Payment Assistance Gift Money:

*Update for Down Payment Assistance Programs, August 1st, 2008. 

At the end of July, 2008, Congress passed the “Housing and Economic Recovery Act of 2008” and this legislation was signed by President Bush.  Part of this Act included increasing loan amounts in various part of the country which will be helpful for home owners buying a home and / or refinancing their existing mortgage.

However, as a part of this Act, the acceptance of Down Payment Assistance Programs was eliminated.  This is one of the controversial parts of the bill, as many deserving prospective home buyers need the help for home ownership and this gift for a down payment.  The use of DPAP’s will be eliminated at the end of September 2008, unless there is a resolution or change approved by both Congress and the President. 

There are now non profit organizations that will give you gift for the down payment of your FHA or VA home loan.  As a homebuyer, you can get a free gift for your down payment and you can use this gift as a down payment for a home in almost any part of the metropolitan area.

As a Loan Officer for Pulaski Bank Home Lending in Kansas City, I have access to several different gift programs used in association with the FHA loan. I can help you obtain your free gift and home loan for almost any home you find, provided the loan amount is not in excess of the FHA maximum loan in the metro area.

Once you are approved for the FHA Home Loan through Pulaski Bank Home Lending, I will order your gift funds from one of our sources. There are no income restrictions with the gift program and the combination of the gift program and the FHA loan is ideal for first time homebuyers, borrowers with reduced credit scores, or for couples moving up from one neighborhood to another.
I know this loan option sounds too good to be true, but this gift combination with an FHA loan is a reality.  Of course, there are some restrictions, as with any home loan purchase.   Most of the Down Payment Assistance Program [DPAP] requires the Seller to participate, but either your Realtor or I can help with that detail.  I have originated many of these FHA loans since their inception over the past seven years and can give you references to happy homeowners that otherwise would not have been able to purchase a home.