If a family member is helping with your down payment, that generosity comes with paperwork — specifically, a mortgage gift letter. Lenders need to confirm the money is a true gift and not a loan you’ll have to repay, because a hidden loan would change your ability to afford the mortgage. Here’s exactly what a gift letter is, what it must include, and how to document gift funds so they don’t hold up your closing.
What a Mortgage Gift Letter Is
A mortgage gift letter is a signed statement from the person giving you money, confirming the funds are a gift with no expectation of repayment. Lenders require it because an undisclosed loan would raise your debt and affect whether you truly qualify. The letter proves the money is yours to keep, so the lender can count it toward your down payment without treating it as new debt.
What the Gift Letter Must Include
Lenders — following Fannie Mae, Freddie Mac, and FHA guidelines — expect a gift letter to contain specific details. At minimum:
- The dollar amount of the gift
- A clear statement that no repayment is expected
- The donor’s name, address, and phone number
- The donor’s relationship to you (the borrower)
- The property address being purchased
- The donor’s signature and date (FHA also requires the borrower to sign and date it)
Missing any of these can send the letter back for correction and delay your closing, so it’s worth getting right the first time. Your lender or broker can provide a template that already includes every required field.
Who Can Give Gift Funds — It Depends on Your Loan
This is where buyers most often get tripped up: the eligible donor list changes based on your loan type.
Conventional loans take the most restrictive view. Gifts must come from a relative by blood, marriage, adoption, or legal guardianship — plus a domestic partner, fiancé(e), former relative, or someone with a long-standing familial-like relationship. Non-family gifts are generally only allowed if you’re putting down 20% or more.
FHA loans are more flexible. In addition to family, they allow gifts from a close friend with a documented interest in you, an employer, a labor union, a charitable organization, or a government down-payment-assistance program.
VA and USDA loans are the most open — almost anyone can gift, except a party with a financial interest in the sale.
The one universal rule across every loan type: the gift cannot come from anyone involved in the transaction — not the seller, the builder, the listing agent, or your own agent. That’s considered an interested-party contribution, not a gift.
How Much Can Be Gifted
For most primary-residence purchases, the entire down payment can be gift funds. On an FHA loan, 100% of the 3.5% minimum down payment can be gifted. On a conventional loan with less than 10% down, some programs require you to contribute a small percentage of your own funds, though many primary-residence conventional loans allow the full down payment as a gift. On 2-to-4 unit or second-home purchases, conventional loans typically require you to put in at least 5% of your own money.
The IRS Side — What the Gift Tax Rules Actually Mean
Many buyers panic about “gift tax,” but it rarely applies. For 2026, the annual gift tax exclusion is $19,000 per donor, per recipient — so a parent can give you up to $19,000 with no reporting at all, and a married couple can jointly give up to $38,000. Gifts above that require the donor to file IRS Form 709, but no tax is actually owed unless the donor has exceeded their lifetime exclusion, which is over $13 million. And importantly, the tax obligation — if any — is the donor’s, never yours as the recipient. For the vast majority of down-payment gifts, there’s no tax consequence for anyone.
The 60-Day Seasoning Rule — Timing Matters
Here’s a practical tip that saves paperwork: lenders typically review your last two months (60 days) of bank statements. If gift money has been sitting in your account longer than that, it’s generally considered “seasoned” — treated as your own funds, often with less documentation required. If you know a gift is coming and have time, receiving it early can simplify the process. If it arrives close to your application, be ready to fully document it: the gift letter, proof of the transfer, and sometimes the donor’s bank statement showing the funds came from them.
How to Document Gift Funds Correctly
Beyond the letter itself, lenders usually want a clear paper trail: a copy of the check or transfer record, a deposit record showing the money landing in your account, and sometimes the donor’s bank statement showing the withdrawal. The cleanest approach is a single traceable transfer — one wire or check for the full gift — rather than cash or multiple small deposits, which are hard to verify. A broker who handles this regularly can tell you exactly what your specific lender will want, so nothing surprises you late in the process.
Mortgage Gift Letter FAQ
What is a mortgage gift letter?
A signed statement from the person giving you down-payment money, confirming it’s a gift with no repayment expected. Lenders require it so the funds can count toward your down payment without being treated as a loan that affects your qualification.
Who can give me gift funds for a down payment?
It depends on your loan. Conventional loans generally require family or a familial-like relationship; FHA also allows close friends, employers, and charities; VA and USDA allow almost anyone. No loan type allows a gift from someone involved in the sale, like the seller or agent.
How much money can be gifted for a down payment?
Often the entire down payment. FHA allows 100% of the 3.5% minimum to be gifted; conventional primary-residence loans frequently allow the full amount, though 2-4 unit and second-home purchases usually require 5% of your own funds.
Will I owe taxes on a down payment gift?
Almost never. The 2026 annual exclusion is $19,000 per donor per recipient ($38,000 from a couple). Larger gifts require the donor to file Form 709 but rarely owe tax, and the obligation is the donor’s, not yours.
What is the 60-day rule for gift funds?
Lenders review your last two months of bank statements. Gift money deposited more than 60 days before applying is generally treated as your own seasoned funds, often requiring less documentation than a recent gift.
