A tried and true method of making a mortgage down payment is with a gift of money from a relative. Whether it’s from Mom, Dad, a son or daughter, even grandparents—it’s a great way to get into a home. But unless you take the proper steps, that gift money could actually delay your home-buying process. First off, be sure you document your financial gift carefully. A lender will need to see copies of the checks and deposit slips involved. They want to be sure you have not taken out another loan as a down payment on the biggest investment of you life. Without proper documentation, your loan approval could be delayed as you do some serious backtracking. 

Some lenders won’t let you use more than ten-percent gift money. Others will accept as much money as your relatives want to bestow on you. Be sure to tell your lender up front that you plan to receive gift money. He’ll tell you about good loan choices, like FHA. Unlike many other loans, FHA will accept gift money for your entire down payment and your closing costs.