Using gift money for your down payment

Who can give me gift money?

For a conventional loan sold to Fannie Mae, a gift can come from a relative, or from a fiancé, fiancée or domestic partner. FHA accepts a wider list, including family, a close friend with a documented relationship, an employer or labor union, and certain charities and government programs.

Under every program, the gift can't come from anyone with a stake in the sale, such as the seller, the builder or a real estate agent in the deal. Help from a seller is handled separately, as a seller credit toward closing costs within each program's limits.

What goes in a gift letter?

The lender gives you a gift letterGift letter A signed letter from the person giving you money toward your purchase, stating it's a gift that doesn't have to be repaid. See the full glossary× form to sign with the person giving. It typically lists the donor's name, address, phone number and relationship to you, the amount and date of the gift, the property address, and a statement that no repayment is expected. If the money is really a loan that you'll pay back, it isn't a gift, and it has to be counted as a debt.

How do I document the transfer?

• Keep the money moving between bank accounts, by check or wire, rather than in cash, which is hard to document.
• Expect the lender to ask for proof that the money left the donor's account and arrived in yours, or went straight to the closing attorney or title company.
• Don't move gift money between several of your accounts before closing; each move adds statements to explain.
• Tell Tom about a planned gift early, so it's documented the way your lender wants the first time.

Do the rules differ by loan program?

Yes. Fannie Mae allows gifts for a primary home or a second home, but not for an investment property. FHA has its own donor list and documentation rules, and VA loans also accept gifts. NH Housing assistance is a program, not a gift, and can sometimes be combined with one. Some programs also expect part of the down payment to come from your own funds in certain cases, which Tom can check for your loan.

When should the gift money move?

Ask Tom before the money moves. Depending on the lender, it may be simplest to transfer it before you apply, so it shows on your statements with a gift letter, or at closing, sent straight to the closing agent. Either can work; what matters is that the lender can follow it. The after-you-apply guide covers the other money moves to avoid during underwritingUnderwriting The lender's review of your full application to confirm the loan meets its guidelines. See the full glossary×.

What are the next steps?

Run the affordability calculator with the gift included, then get pre-approved so the gift is documented from the start. The first-time buyer guide covers the rest of the process.