Can I use a gift or inheritance as my deposit?

Plenty of buyers can put together a deposit, but not as money saved slowly over time, perhaps because it comes from family, an inheritance or a bonus. Lenders treat this differently to long term savings. Here is how the genuine savings rules work and how to use a gift or windfall.

Genuine savings versus other funds

Lenders draw a distinction between genuine savings, money you have accumulated over time, and other funds such as a gift from family, an inheritance or a work bonus. Genuine savings are seen as evidence of financial discipline, which is why some lenders place weight on them, particularly for borrowers with smaller deposits.

When genuine savings are required

Some lenders require part of your deposit to be genuine savings, often money held or accumulated over a period such as three months. This requirement is more common for higher loan to value ratio loans, where the lender wants extra comfort. So whether you need genuine savings can depend on the size of your deposit and the loan.

Using a gift

A gift from family, commonly from parents, can often be used as part or all of a deposit. Lenders generally want a gift letter confirming the money is a genuine gift and not a loan that must be repaid, since a repayable loan would be a commitment affecting serviceability. With the right documentation, gifted funds are widely usable.

Using an inheritance or bonus

An inheritance or a work bonus can similarly be used toward a deposit. Some lenders will accept these as the entire deposit, particularly where the deposit is larger or under certain products, while others still want a portion of genuine savings. The treatment varies, so it depends on the lender.

Scheme requirements can differ

Where you are using a government scheme, the scheme own rules on genuine savings may apply on top of the lender policy. For example, schemes that require a minimum genuine savings deposit have their own definition of what counts. So if you are combining a gift with a scheme, check the scheme requirements too.

Larger deposits ease the requirement

The genuine savings requirement tends to relax as your deposit grows. A borrower with a substantial deposit, even if gifted, is generally seen as lower risk, so some lenders are more flexible about the source of funds at lower loan to value ratios. So a larger gifted deposit can be easier to use than a small one.

Find a lender that accepts your funds

Because policies on genuine savings and gifts vary, the useful step is to match your source of funds to a lender whose policy accepts it. A broker can identify lenders comfortable with a gift, inheritance or bonus for your situation, usually at no cost to you. This is general information, not advice.