Who is allowed to give a gift by program
Conventional (Fannie/Freddie): Only relatives — spouse, parents, siblings, grandparents, aunts/uncles, in-laws, domestic partners, fiancé(e). No friends, no employers.
FHA: Broader — family, employer, close friend with 'clearly defined interest,' labor union, charity, government agency.
VA: Anyone who's not the property seller, lender, agent, or someone with a financial interest in the transaction.
USDA: Similar to FHA — family, employer, charitable organization, government agency.
Gifts cannot come from anyone involved in the sale. If your uncle is the seller, his cash is not a gift — it's a discount.
The gift-letter requirements
Every gift requires a signed gift letter with:
- Donor's name, address, phone, and relationship to borrower
- Exact dollar amount of gift
- Property address being purchased
- Statement that no repayment is expected
- Donor's signature and date
Most lenders provide a template. The letter alone is not enough — you also need to prove the money moved and where it came from.
The paper trail underwriting will demand
Underwriting will ask for:
1. Donor's account statement showing the funds were there before transfer (sourcing the gift's origin). 2. Copy of the check or wire receipt documenting the transfer. 3. Your account statement showing the deposit.
Do NOT commingle the gift with your own funds in a way that obscures the trail. Best practice: donor writes a cashier's check made out to you (or the title company), you deposit it in a separate transaction, and everything stays visible.
Cash gifts are not acceptable — they can't be sourced.
Is this path right for you?
Frequently asked questions
How much of the down payment can be a gift?
100% for FHA. 100% for conventional if you're putting down 20%+; if less than 20%, most programs require at least a portion (usually 3%–5%) from your own funds.
Do I have to pay taxes on a mortgage gift?
No — the recipient doesn't pay tax on a gift. The donor may need to file IRS Form 709 if over the annual exclusion ($18K/person in 2025), but no tax is usually owed until lifetime exclusion is exceeded.
Can I use a gift for closing costs too?
Yes — all four programs allow gift funds for closing costs and prepaids, not just down payment.
Related guides
- The Complete First-Time Homebuyer's Readiness Guide
- How much home you can actually afford
- Pre-approval checklist
- Back to the Knowledge Base
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