Yes, a gifted down payment can sit behind a Home Equity Conversion Mortgage when the gift is real and the house is a principal residence. Jay Zayer, CRMP, is a reverse mortgage specialist at reversemortgage.coach. On HECM for Purchase, 24 CFR 206.44 still requires a monetary investment. Gift funds from a relative who is not the seller can be an allowed source. Gift funds from the seller are interested-party money, not a family loophole.
Imagine a couple who are Veda, 69, and her spouse in Vista, buying a house with a documented gift from their daughter for the cash 24 CFR 206.44 requires. If they will occupy, they are 62, and the daughter is not the seller, that purchase file can proceed. If the seller is also the donor, see family-member purchase.
A HECM remains FHA-insured. A gift check is not a government down-payment grant.
Can HECM for Purchase use a relative’s gift as the cash investment?
Yes, when sourcing is documented and the donor is not an interested party in the contract. 24 CFR 206.44(b) allows cash on hand, cash from selling assets, HECM proceeds, and other sources the Commissioner has approved by notice. A seller credit above 24 CFR 206.44(c) is not a gift from “Mom” when Mom is on the purchase agreement.
This page is gift cash. Gifted home is occupying a house you were deeded. What is HECM for Purchase is the investment formula. Stay here for the check.
Leftover capacity after the purchase still sits in the mid-30s to low-50s of value after age and expected rate. I will not quote a live cell. Model the cash to close after the gift letter is real.
What if the gift already closed last year and I now want a HECM refinance?
Then occupancy under 24 CFR 206.39 and title under 24 CFR 206.35 are the live tests. 24 CFR 206.36 seasons existing non-HECM liens, not the gifted cash that helped you buy. HUD does not print a twelve-month wait after a gifted down payment. Lender overlays may still wait. Confirm that overlay with the underwriter. I will not invent a day count.
Mortgagee Letter 2017-12 still charges 2.00% initial MIP of claim amount on a gift-funded purchase or a later refinance. Annual MIP is 0.50% of outstanding balance. 2026 files still use the $1,249,125 cap in Mortgagee Letter 2025-22. Origination is still capped at $6,000 under 24 CFR 206.31. A gift letter does not discount MIP.
If residual income requires a LESA, that set-aside is still origination-only. Gifted cash does not create a LESA.
Counseling still costs $125–$175. The HUD certificate lasts 180 days. California Civil Code 1923.2(k) still adds seven days after counseling on Veda’s Vista purchase. Build that pause into the contract.
What paper does underwriting want for the gift?
A gift letter that says no repayment is expected, proof the donor had the funds, and a paper trail into the escrow. I will not invent a HUD gift-form number. Confirm the live exhibit list with the underwriter.
A second geography: a 72-year-old in Surprise whose Arizona daughter wired earnest money. Same 24 CFR 206.44 tests as Vista. The wire, not the Thanksgiving story, is the exhibit.
An adjustable H4P or later HECM refinance still accrues at 1-month CMT plus lender margin. Expected rate still rounds to 0.125% under 24 CFR 206.3.
Jay still quotes about 30 days on a complete refinance; a purchase with a gift is not that refinance clock.
Who should not treat a seller credit as a family gift?
This path does not help a household that recycles the seller’s proceeds back as Veda’s down payment. I will not. Occupancy is still 24 CFR 206.39 after the purchase.
Heirs who later keep a gift-funded HECM house repay the outstanding loan balance under 24 CFR 206.125(a)(2)(i). A gift letter does not rewrite that subsection.
I work with multiple lenders. I will originate a documented gift that is not seller money. I will turn away a circular credit whose only donor is the person selling the house.
A gift of equity on a family sale is the family-member-purchase page, not this check-gift page. Veda’s daughter writing a check is 24 CFR 206.44 sourcing. Veda’s daughter selling the house below market is identity-of-interest. Do not mash those exhibits. Overlay on a gift of equity is still an underwriter question. This page will not invent an LTV cap.
Can I treat money from a jointly owned brokerage account as a gift?
If Veda already owns the account, that is her cash, not a gift. 24 CFR 206.44 cares about source and about interested parties. A daughter’s documented gift, with proof the daughter had the funds and a trail into escrow, is the usual relative-gift exhibit. A circular credit from the seller labeled “Mom’s gift” when Mom is on the purchase agreement is interested-party money. I will not originate that.
Surprise, Arizona, wires follow the same 24 CFR 206.44 tests as Vista. HUD does not print a twelve-month ownership wait after a gifted down payment on a later refinance. Lender overlays may still wait. Confirm that overlay with the underwriter. I will not invent a day count. Occupancy under 24 CFR 206.39 still has to be true after the purchase. A gift letter does not occupy the house.