Jeremy Lin has signed a three-year offer sheet with the Houston Rockets, according to a source close to the talks. The deal is worth a little more than $25 million -- $5 million in the first year, $5.225 million in the second and $14.8 million in the third.

As of Saturday afternoon, however, the New York Knicks had yet to receive the offer sheet from the Rockets, a league source said. Once the Knicks do, they'll have three days to match.

Initial reports had the Rockets offering Lin a four-year deal for around $28 million. That deal included salaries of more than $9 million in each of the last two years, which would be a big hit on the Knicks' cap. Still, the organization seemed intent on matching.

"They will match any offer on Lin up to $1 billion," a source told ESPN.com's Marc Stein last week.

It's not clear, however, if the new deal changes that thinking since the third year of the current deal carries an even bigger cap hit.

If the Knicks re-sign Lin, they'll have $75 million tied up in four players -- Amare Stoudemire, Carmelo Anthony and Tyson Chandler -- in 2014-15.

Houston had a verbal agreement with Lin before the team emerged as a serious suitor for Dwight Howard. The Rockets will use the amnesty clause on forward Luis Scola, sources told ESPN.com's Marc Stein, creating salary-cap space to take on bad contracts from the Orlando Magic. But the Lin offer sheet and an identical offer to Bulls center Omer Asik complicate the financial details of any trade with Orlando.