Using Gift Money for Your Home Down Payment

When buying a home, you don't always have to use your own savings for the down payment.

Many homebuyers receive money as a gift from others to help cover this cost. This gifted money is called "gift funds."

Gift funds can come from different people depending on the type of loan you're getting. Common sources include:
 

• Family members (parents, siblings, grandparents)
• Your spouse, partner, or fiancé
• Close friends
• Employers
• Charitable organizations

 

What Is a Gift Letter?

If you use gift money for your down payment, your lender will ask you for a gift letter. This is a simple document that proves the money was given to you as a true gift—not a loan you have to pay back.
 

What to Include in a Gift Letter

Your lender will tell you exactly what they need, but most gift letters include:
 

• The giver's name and their relationship to you (plus their signature)
• The giver's contact information
• Your bank account details
• The exact dollar amount of the gift
• The date the money was given or transferred
• A statement saying the money is a gift and does not need to be repaid
• The address of the home you're buying

Tip: Small gift amounts may not need official documentation, but it's always smart to keep records of any money deposited into your accounts. When in doubt, ask your lender.
 

Rules for Different Loan Types

Different types of home loans have different rules about who can give you gift money.

Conventional Loans

You can use gift funds from family members, including:
 

• Parents, siblings, or children
• Grandparents
• Domestic partners or fiancés
• Aunts, uncles, nieces, nephews, and in-laws
• Family members can be related by blood, marriage, adoption, or legal guardianship.

FHA Loans

These loans have stricter rules. Gift funds must come from close family members—gifts from cousins, nieces, or nephews usually aren't accepted. However, FHA loans do allow gifts from:
 

• Close friends with a genuine relationship with you
• Employers
• Charitable organizations
• Labor unions

VA Loans

You can use gift funds as long as the person giving the money is not involved in the home sale. This means the gift cannot come from:
 

• The home builder or developer
• Your real estate agent or broker
• Anyone else with a financial interest in the transaction

 

How Much of Your Down Payment Can Be a Gift?

If you're buying a primary home (where you'll live) or a secondary home (like a vacation house), you can often use gift money for part or all of your down payment.

However, keep these points in mind:
 

• Some lenders may require you to contribute some of your own money, especially if your down payment is less than 20% of the home's price.
• FHA and VA loans are not available for secondary homes.
• Gift funds cannot be used for down payments on investment properties (homes you buy to rent out or sell for profit).

 

Next Steps

If you have questions about using gift funds for your home purchase, talk to a mortgage professional.

They can explain the specific requirements for your situation and help you understand what documentation you'll need.

-

Need help with your down payment? Find resources and assistance here!