HomeOne® Gift Funds Overview
HomeOne® is a 97% loan-to-value conventional mortgage from Freddie Mac that lets first-time home buyers accept cash gifts for their entire 3% down payment, plus closing costs. Buyers are not required to use their own savings to purchase a home.
Who Can Give Gift Funds?
The HomeOne® mortgage has rules for who can gift funds to a home buyer and how those funds are used.
- A relative by blood, marriage, adoption, or legal guardianship
- A fiancé, fiancée, or domestic partner
- An employer
- An approved charitable organization or nonprofit
Gift funds must come from a personal source and may not come from anyone who benefits from the purchase or sale of the home. Ineligible donors include the home’s seller, the real estate agent, or people who stand to benefit financially from the transaction.
When your donor meets the eligibility rules, you may use gift funds for your down payment and closing costs with no personal funds required.
Donor eligibility reference guide
| Donor Type | Eligible Donor? |
|---|---|
| Parent, sibling, or child | Yes |
| Spouse, fiancé, or life partner | Yes |
| Employer or workplace program | Yes |
| Nonprofit or charitable foundation | Yes |
| Legal guardian or custodian | Yes |
| Home seller | No |
| Real estate agent or broker | No |
| Anyone with a financial stake in the sale | No |
| Builder or property developer | No |
| Mortgage company or lender | No |
Using Gift Funds With HomeOne®
HomeOne® mortgage guidelines allow gift funds to be used for:
- The minimum 3% down payment required for the program
- All closing costs, including lender and title fees
- All prepaid items like taxes and homeowners insurance
Gift funds may not be used for:
- Cash back to the buyer at closing
- Reserve requirements
- Investment property purchases
- Any cost that is not a documented part of the transaction
If you have questions about whether a specific fee or cost is eligible, ask your lender for clarification before moving forward.
Documentation Requirements for Gift Funds
As part of your purchase, lenders will verify any gift funds received to make sure they are actually a gift and not a loan in disguise.
Conventional mortgage guidelines provide a clear blueprint for how to give and receive cash gifts from eligible donors. Typically, you'll be asked to provide:
- A gift letter signed by the donor, stating the amount of the gift, the donor’s relationship to you, and that no repayment is expected.
- Proof of transfer showing the movement of funds from the donor’s account to yours or directly to the closing agent.
If you know you'll receive a cash gift for down payment, submitting these items early in your approval can help your mortgage close more quickly.
Documents required for a cash gift for down payment
| Document | What It Does |
|---|---|
| Gift Letter | Confirms the money is a gift, not a loan |
| Proof of Transfer | Shows funds moved from donor to buyer |
| Donor’s Bank Statement | Verifies donor had the money available |
| Buyer’s Bank Statement | Confirms buyer received the funds |
| Final Closing Statement | Shows the gift was used for the purchase |
Common Mistakes with Gift Funds
Gift funds are easy to accept, but buyers and their gifters commonly make mistakes that slow down closing and, in extreme circumstances, cause the gift funds to get rejected.
Here are a few mistakes to watch out for:
- Forgetting to include a complete gift letter with signatures
- Not providing proof that the money was transferred
- Accepting a gift from someone who isn’t allowed to give one
- Moving funds after the lender has already checked your accounts
Keeping good records and letting your lender know about gifts early may help your loan process go smoothly.
Key Takeaway
HomeOne® is a low-down-payment mortgage that lets first-time buyers receive their entire down payment as a cash gift so that buyers can buy homes with no money out of pocket.
Frequently Asked Questions About HomeOne® Gift Funds
Find answers about who can give gift funds, how to document them, and how they can be applied on a HomeOne® mortgage.
Can gift funds cover the full 3% down payment on HomeOne®?
Yes. Freddie Mac allows the entire minimum down payment and closing costs to be paid with gift funds.
Who can give gift funds for a HomeOne® mortgage?
Eligible donors include family members, a fiancé or domestic partner, employers, and certain nonprofits.
Do I need to contribute any of my own money?
No. HomeOne® has no minimum borrower contribution requirement.
What documentation is required for gift funds?
A signed gift letter and proof of transfer from the donor's account.
Can a seller provide gift funds?
No. Sellers can give credits at closing but not direct gift funds.
