Yes. Funds gifted by family can be used for both your down payment and your closing costs.

Three conditions have to hold. The money must carry no repayment obligation. The person giving it must be an eligible donor. And the movement of funds — out of the donor's account and into yours — has to be traceable through documentation. In practice, the third is where files run into trouble.

Eligible donors are generally family: parents, siblings, a spouse, in-laws, a fiancé. What doesn't qualify is money from anyone with a stake in the transaction — the seller, a builder, a real estate agent. Funds from an interested party aren't treated as a gift at all; they're reclassified into a separate category with its own limits.

Two things are required. First, a gift letter identifying the donor, the relationship, the amount, the subject property address, and an explicit statement that no repayment is expected. Second, the paper trail: the withdrawal from the donor's account and the deposit into yours have to connect, or, if the funds wire directly to the title company at closing, that documentation stands in its place.

This is where problems originate. Cash deposits can't be traced to a source and are difficult to count. Funds commingled with other money complicate verification. Anything that arrives the wrong way has to be untangled afterward, and the schedule slips while that happens. Sorting out the sequence before the money moves is the single most important step.

If you're buying a home from a family member, a gift of equity is an alternative. The seller sells below appraised value and the difference is treated as the gift, so no funds transfer at all. It does have to be reflected in both the gift letter and the purchase contract, so confirm it before the contract is written. And if the money is coming from Korea, build in extra lead time. We've handled overseas funds and family gifts for over 30 years.