Using gift funds for a primary home purchase is a common practice, and many lenders allow it. Gift funds are funds given to you by a family member, friend, or other eligible source to help you with the down payment or closing costs.

Here are some key points to consider:

1. Gift Letter: Most lenders require a gift letter, which is a written statement from the person giving you the gift. The letter should include their relationship to you, the amount of the gift, and a statement that the funds are a gift and not a loan.

2. Source Verification: Lenders may ask for documentation to verify the source of the gift funds. This is to ensure that the funds are coming from an acceptable source, such as a family member or close friend.

3. Down Payment Requirements: The use of gift funds may be subject to certain restrictions based on the type of mortgage and down payment requirements. Some loans may have specific rules about the percentage of the down payment that can come from gift funds.

4. Credit Implications: Generally, using gift funds does not directly impact your credit score. However, lenders will still assess your overall financial situation, including your ability to repay the mortgage.

5. Tax Implications: From a tax perspective, gifts may be subject to gift tax rules. It’s advisable to consult with a tax professional to understand any potential tax implications for the giver.

It’s essential to communicate openly with your lender and provide all necessary documentation to ensure a smooth transaction. Keep in mind that mortgage requirements may vary among lenders, so it’s a good idea to check with your specific lender for their policies regarding the use of gift funds.