Using Gift Funds for a Down Payment

What counts as a gift versus a loan

For mortgage purposes, a gift must come with no expectation of repayment. If the funds need to be paid back in any form, lenders treat them as a loan, which is handled differently in qualification since it can represent additional debt.

Who can give a gift

Eligible donors typically include parents, grandparents, siblings and other close family members. Some loan programs extend eligibility to a fiancé(e), domestic partner or godparent, while others are more restrictive. Confirm the specific donor relationships allowed under your loan program.

Required documentation

Lenders generally require a combination of the following to document a gift:

• A signed gift letter stating the relationship, amount and that repayment isn't expected.
• The donor's bank statement showing the funds available and withdrawn.
• The borrower's bank statement or deposit record showing the funds received.

How much of the down payment can be gifted

Some loan programs allow gift funds to cover the entire down payment, while others require the borrower to contribute a minimum amount from their own funds, particularly for certain property types, occupancy or loan-to-value scenarios. Your loan officer can confirm the requirement for your program.

Timing the gift correctly

Transferring gift funds well before closing and keeping clear records generally makes the process smoother, since sudden large deposits close to closing can trigger additional documentation requests. Discuss timing with your loan officer early in the process.

Gift funds and other down payment sources

Gift funds can often be combined with your own savings or, depending on the program, down payment assistance funds. Each source typically needs its own documentation trail, so keeping records organized helps avoid delays.