If a family member wants to help you buy a home, gift funds are allowed on most loan programs and can cover part or all of your down payment and closing costs.
Who can give a gift
Conventional and FHA loans generally allow gifts from family members. FHA also allows gifts from close friends with a clear interest in your wellbeing, employers, and certain organizations.
The paperwork lenders need
- A signed gift letter stating the money is a gift and not a loan
- Proof of the donor's ability to give the funds
- A clear paper trail showing the money moving to you or closing
Why the rules exist
Lenders need to confirm the down payment is not a hidden loan that would change your debt picture. A clean paper trail keeps your file moving and avoids last-minute delays.
Tell your loan officer about gift funds early so the gift letter and documentation are handled before they hold up your closing.