Key takeaways
- Most loan programs allow family members to gift part or all of your down payment.
- Lenders require a signed gift letter stating the money doesn't need to be repaid.
- You'll need to document the transfer from the donor's account to yours or to the title company.
- Gifts from parties with a financial interest in the sale, like the seller or agent, are generally not allowed as gifts.
Help from family is one of the most common ways first-time buyers come up with a down payment. Lenders are happy to accept gifts, but they need proof the money is truly a gift and not a hidden loan that adds to your debt. The paperwork is simple once you know what's required.
Who can give you a gift?
| Loan type | Acceptable donors (general rules) |
|---|---|
| Conventional (Fannie Mae/Freddie Mac) | Relatives by blood, marriage, adoption or legal guardianship; fiancé or domestic partner; certain others under program rules |
| FHA | Family members, employers or labor unions, close friends with a documented interest, charitable organizations, and government agencies |
| VA | Generally anyone without an interest in the sale, documented with a gift letter |
| USDA | Family and others without an interest in the transaction, documented with a gift letter |
Individual lenders can apply stricter rules, so confirm with your loan officer before money moves.
How much can be a gift?
For a one-unit primary residence on a conventional loan, the entire down payment can generally come from a gift with no minimum contribution from your own funds. Multi-unit homes and second homes may require some of your own money. FHA allows the full 3.5% minimum down payment to be gifted. Investment properties generally don't allow gift funds for the down payment.
What goes in a gift letter
Your lender will usually provide a template. It typically includes:
- The donor's name, address, phone number and relationship to you
- The exact dollar amount of the gift
- The date the funds were or will be transferred
- The address of the property being purchased
- A clear statement that no repayment is expected or implied
- The donor's and borrower's signatures
Building the paper trail
Underwriters want to follow the money from the donor to you. Common ways to document it:
- Transfer to your account: provide the donor's bank statement or withdrawal slip showing the funds leaving their account, plus your statement showing the deposit.
- Transfer directly to the title company: provide evidence of the wire from the donor and the title company's receipt.
- Cashier's check: provide a copy of the check and the donor's statement showing the withdrawal.
Avoid cash. It's very difficult to document and often can't be used.
Timing matters
If the gift arrives well before you apply, for example 60 days or more and it already appears in your account statements, lenders may treat it as your own seasoned funds. If it arrives during the loan process, expect the full documentation above. Either way, tell your loan officer about it upfront.
Example: a buyer's parents plan to give $15,000 toward a $300,000 home. They sign the lender's gift letter, wire the money directly to the title company a week before closing, and send the lender their bank statement showing the outgoing wire. The underwriter matches the amounts and clears the condition the same day.
Tax considerations for the donor
For 2026, an individual can give up to the IRS annual gift tax exclusion amount per recipient without filing a gift tax return. Larger gifts typically require the donor to file IRS Form 709, but tax is rarely owed because of the lifetime exemption. A married couple can each give up to the annual limit. The donor should confirm details with a tax professional.
What isn't allowed
- "Gifts" that you secretly agree to repay. This can be mortgage fraud.
- Gifts from the seller, builder, real estate agent or anyone else with a financial interest in the sale. Help from these parties is usually treated as a seller concession with its own limits.
Gift of equity: a special case
If you're buying a home from a family member, they can give you a "gift of equity" by selling the home for less than its appraised value. The difference counts toward your down payment, so you may need little or no cash for it. For example, a parent sells a home appraised at $300,000 to their child for $255,000. The $45,000 gift of equity covers a 15% down payment. Lenders still require a gift letter, and the transaction appears on the Closing Disclosure as a credit. Most loan programs allow gifts of equity from family members, but rules vary, so confirm with your lender early.
Frequently asked questions
Can a friend give me down payment money?
On FHA loans, a close friend with a documented relationship may qualify. Conventional loans are generally limited to relatives and partners. Ask your lender.
Can gift money be used for closing costs too?
Yes, on most loan types gifts can cover both the down payment and closing costs.
Does the donor need to show their bank statement?
Often yes, or at least a document showing the funds leaving their account. Lenders need to confirm the source of the money.
