Purchasing a home is a big step, and for many buyers, gift funds play an important role in making it possible. A monetary gift from a parent, grandparent, or another approved source can help cover your down payment or closing costs, making homeownership more accessible. But while gift funds can be incredibly helpful, there are important rules and guidelines you’ll need to follow to ensure the process goes smoothly.

Here are some key things to keep in mind:

In most cases, gift funds come from close family members such as parents, grandparents, or siblings. Depending on the loan program, gifts from extended family, close friends, or even approved charitable or employer-based programs may also be acceptable. Each loan type sets its own rules, so it’s important to confirm that your donor qualifies before transferring any money.

When lenders review your file, they need to confirm that gifted money is truly a gift, not a loan that could affect your ability to repay the mortgage. That’s why a signed gift letter is required. This document outlines who gave the money, the relationship to the buyer, the amount, and a clear statement that no repayment is expected. In addition, lenders may ask for proof of the donor’s ability to provide the funds (like a bank statement) and a paper trail showing when the money was transferred.

Not all mortgages treat gift funds the same way. For example:
• Conventional loans may allow gift funds to cover all or part of your down payment, depending on your credit profile and occupancy type.
• FHA loans are often more flexible, allowing 100% of the down payment and closing costs to come from gift funds in many situations.
• VA loans typically don’t require a down payment at all, but gifts can be used to cover closing costs or reduce the amount you need upfront.

Knowing the guidelines for your specific loan type helps prevent surprises down the road.

One of the most common mistakes homebuyers make is waiting too long to receive gift funds. Because the transfer has to be documented and verified, last-minute deposits can cause delays in underwriting. To avoid stress, work with your donor early in the process to get the money transferred and the paperwork completed well before closing.

Every borrower’s situation is different, and the rules can vary depending on the type of loan and even the lender. Before accepting any gift, talk with your loan officer. They’ll guide you on what’s allowed, help with the required documentation, and ensure everything is handled correctly so your homebuying journey stays on track.


We know that navigating the mortgage process can feel overwhelming. That’s why we take the time to walk you through details like gift funds, making sure you understand your options and feel confident.

Ready to see how gift funds could help with your home purchase? Contact us today and let’s walk through your options together.