What we verified in “Gift money from family to buy a home”

Statements and where we checked them

The statements with rules, figures or dates, with the exact place in the source and the date we checked them.

1. For Fannie Mae, if you buy a principal residence or a second home you may use money received as a personal gift from an acceptable donor; the gift can cover all or part of the down payment, closing costs or reserves, subject to the minimum contribution rules; and gifts are not allowed on an investment property.

   Sources 1 · Selling Guide B3-4.3-04, Personal Gifts (02/04/2026), 'Gift Funds': 'A borrower of a mortgage loan secured by a principal residence or second home may use funds received as a personal gift from an acceptable donor'; 'Gift funds may fund all or part of the down payment, closing costs, or financial reserves subject to the minimum borrower contribution requirements'; 'Gifts are not allowed on an investment property' · Checked October 17, 2026

2. For Fannie Mae, a gift can come from a relative (your spouse, child or other dependent, or anyone related to you by blood, marriage, adoption or legal guardianship) or from a non-relative with a family-like relationship: your domestic partner or a relative of theirs, your fiancé or fiancée, a former relative, or someone with a long-standing family-like or mentorship relationship with you; the donor may not be, or be affiliated with, the builder, the developer, the real estate agent or any other interested party to the purchase.

   Sources 1 · B3-4.3-04, 'Acceptable Donors': 'a relative, defined as the borrower's spouse, child, or other dependent, or by any other individual who is related to the borrower by blood, marriage, adoption, or legal guardianship'; 'domestic partner (or relative of the domestic partner), individual engaged to marry the borrower, former relative, or an individual with a long-standing familial-like or mentorship relationship with the borrower'; 'The donor may not be, or have any affiliation with, the builder, the developer, the real estate agent, or any other interested party to the transaction' · Checked October 17, 2026

3. For Fannie Mae, on a one-unit principal residence there is no minimum contribution from your own funds and all the money needed can come from a gift; on a two- to four-unit principal residence or a second home with a loan-to-value ratio over 80%, you must contribute at least 5% from your own funds; and if the donor has lived with you for the last 12 months and both of you will live in the new home as your principal residence, the gift counts as your own funds for that minimum.

   Sources 1 · B3-4.3-04, 'Minimum Borrower Contribution Requirements': 'A minimum borrower contribution from the borrower's own funds is not required'; 'All funds needed to complete the transaction can come from a gift'; 'Greater than 80%'; 'Two- to four-unit principal residence'; 'The borrower must make a 5% minimum borrower contribution from their own funds'; note 1: 'If the borrower receives a gift from an acceptable donor who has lived with the borrower for the last 12 months, the gift is considered the borrower's own funds' · Checked October 17, 2026

4. For Fannie Mae, the gift must be shown in a letter signed by the donor, called a gift letter, which must state the actual or maximum amount of the gift, include the donor's statement that no repayment is expected, and give the donor's name, address, phone number and relationship to you.

   Sources 1 · B3-4.3-04, 'Documentation Requirements': 'Gifts must be evidenced by a letter signed by the donor, called a gift letter'; 'specify the actual or the maximum dollar amount of the gift'; 'include the donor's statement that no repayment is expected'; 'indicate the donor's name, address, telephone number, and relationship to the borrower' · Checked October 17, 2026

5. For Fannie Mae, the lender must verify that the gift money is in the donor's account or has been transferred to yours; acceptable proof includes a copy of the donor's check and your deposit slip, or evidence of an electronic transfer from the donor's account to yours or to the closing agent; and if the money is not transferred before closing, the lender must document that the donor gave it to the closing agent by electronic transfer, certified check, cashier's check or other official check.

   Sources 1 · B3-4.3-04, 'Verifying Donor Availability of Funds and Transfer of Gift Funds': 'the lender must verify that sufficient funds to cover the gift are either in the donor's account'; 'a copy of the donor's check and the borrower's deposit slip'; 'evidence of the electronic transfer of funds from the donor's account to the borrower's account or to the closing agent'; 'the lender must document that the donor gave the closing agent the gift funds in the form of an electronic transfer, certified check, a cashier's check, or other official check' · Checked October 17, 2026

6. For Fannie Mae, a gift of equity is a gift from the seller to the buyer: part of the seller's equity in the home passed to the buyer as a credit in the purchase; it is allowed when buying a principal residence or second home, can cover all or part of the down payment and closing costs but not reserves; the same donor and minimum contribution rules apply; and it is documented with a signed gift letter and the settlement statement showing it.

   Sources 2 · Selling Guide B3-4.3-05, Gifts of Equity (10/07/2020): 'refers to a gift provided by the seller of a property to the buyer'; 'a portion of the seller's equity in the property'; 'is transferred to the buyer as a credit in the transaction'; 'can be used to fund all or part of the down payment and closing costs (including prepaid items)'; 'cannot be used towards financial reserves'; 'The acceptable donor and minimum borrower contribution requirements for gifts also apply to gifts of equity'; 'a signed gift letter'; 'the settlement statement listing the gift of equity' · Checked October 17, 2026

7. For Fannie Mae, on a purchase the lender must document the source of any large deposit you need to close; acceptable documentation includes a wedding invitation to support receipt of gift funds.

   Sources 3 · Selling Guide B3-4.2-02, Depository Accounts (12/14/2022), 'Evaluating Large Deposits': 'the lender must document that those funds are from an acceptable source'; 'a copy of a wedding invitation to support receipt of gift funds' · Checked October 17, 2026

8. For Fannie Mae, the lender must document every source of funds for the down payment, closing costs and reserves; documents of foreign origin must be in English or translated; and when funds come from assets outside the US, there must be evidence that they were exchanged into US dollars and are held in a US or state regulated financial institution, verified in dollars before closing.

   Sources 4 · Selling Guide B3-4.2-05, Foreign Assets (05/04/2022): 'The lender must document all sources of funds used for down payments, closing costs and financial reserves'; 'All documents of a foreign origin must be completed in English, or the originator must provide a translation'; 'exchanged into U.S. dollars and held in a U.S. or state regulated financial institution'; 'verification of the funds in U.S. dollars prior to the loan closing' · Checked October 17, 2026

9. On an FHA loan, a gift is a contribution of cash or equity with no expectation of repayment, and it can come from your family member, your employer or labor union, a close friend with a clearly defined and documented interest in you, a charitable organization, or a government agency or public entity with a homeownership assistance program for low- or moderate-income families or first-time homebuyers.

   Sources 5 · HUD Handbook 4000.1 (last revised 8/12/2026), II.A.4.d.iii(F), Gifts (Personal and Equity) (TOTAL): 'Gifts refer to the contributions of cash or equity with no expectation of repayment'; 'the Borrower's Family Member'; 'the Borrower's employer or labor union'; 'a close friend with a clearly defined and documented interest in the Borrower'; 'a charitable organization'; 'a governmental agency or public entity that has a program providing homeownership assistance to'; 'low- or moderate-income families'; 'first-time homebuyers' · Checked October 17, 2026

10. For FHA, a family member is, regardless of sex or legal marital status: a child, parent or grandparent (including step and foster parents and grandparents); a spouse or domestic partner; a legally adopted child or a foster child; a brother or stepbrother, a sister or stepsister; an uncle or aunt; or a son-, daughter-, father-, mother-, brother- or sister-in-law.

    Sources 5 · II.A.1.a.i(E)(1), Sales Contract, definition of Family Member: 'Family Member is defined as follows, regardless of sex or legal marital status'; 'child, parent, or grandparent'; 'a child is defined as a son, stepson, daughter, or stepdaughter'; 'spouse or domestic partner'; 'legally adopted son or daughter'; 'foster child'; 'brother, stepbrother'; 'sister, stepsister'; 'uncle, aunt'; 'son-in-law, daughter-in-law, father-in-law, mother-in-law' · Checked October 17, 2026

11. On an FHA loan, the lender must get a gift letter signed and dated by the donor and by you, with the donor's name, address and phone number, the donor's relationship to you, the amount of the gift and a statement that no repayment is required; and cash on hand is not an acceptable source of a donor's gift funds.

    Sources 5 · II.A.4.d.iii(F), Gifts (TOTAL), (b) Donor's Source of Funds: 'Cash on Hand is not an acceptable source of donor gift funds'; (3) Required Documentation: 'The Mortgagee must obtain a gift letter signed and dated by the donor and Borrower that includes the following'; 'the donor's name, address, and telephone number'; 'the donor's relationship to the Borrower'; 'the dollar amount of the Gift'; 'a statement that no repayment is required' · Checked October 17, 2026

12. On an FHA loan, if the gift is verified before closing the lender must get the donor's bank statement showing the withdrawal and evidence of the deposit in your account, or a copy of the donor's canceled check with evidence of deposit, or evidence of an electronic transfer from the donor's account to yours; if it is verified at closing, evidence of an electronic transfer from the donor's account, a bank certified check, a cashier's check or other official bank check; and either way it must be able to reasonably determine the money did not come from an unacceptable source.

    Sources 5 · II.A.4.d.iii(F), Documenting the Transfer of Gifts: 'the donor's bank statement showing the withdrawal and evidence of the deposit into the Borrower's account'; 'a copy of the donor's canceled check and evidence of deposit into the Borrower's account'; 'evidence of the electronic transfer of funds from the donor's account to the Borrower's account'; 'For Gifts that will be verified at settlement'; 'evidence of electronic transfer of funds from the donor's account'; 'bank certified check'; 'other official bank check'; 'the Mortgagee must be able to make a reasonable determination that the gift funds were not provided by an unacceptable source' · Checked October 17, 2026

13. On an FHA loan, only family members may give equity as a gift when selling a home to another family member, and the same gift letter signed and dated by the donor and by you is required.

    Sources 5 · II.A.4.d.iii(F)(4), Standards for Gifts of Equity: 'Only Family Members may provide equity credit as a Gift on Property being sold to other Family Members'; 'The Mortgagee must obtain a gift letter signed and dated by the donor and Borrower' · Checked October 17, 2026

14. On an FHA loan, your minimum required investment is at least 3.5 percent of the home's adjusted value, and that money cannot come from the seller, from any other person or entity that benefits financially from the sale, or from anyone they reimburse.

    Sources 5 · II.A.4.d.ii, Source Requirements for the Borrower's Minimum Required Investment (TOTAL): 'which represents at least 3.5 percent of the Adjusted Value of the Property'; 'the funds for the Borrower's MRI must not come from'; 'the seller of the Property'; 'any other person or entity who financially benefits from the transaction'; 'anyone who is or will be reimbursed, directly or indirectly, by any party included in (1) or (2) above' · Checked October 17, 2026

15. The CFPB suggests documenting the source of your down payment and, if some of the money was a gift, getting a signed statement from the giver saying it was a gift.

    Sources 6 · Create a loan application packet (last modified Dec. 12, 2024): 'Documentation of the source of your down payment'; 'if some of the money was a gift, get a signed statement from the giver stating that it was a gift' · Checked October 17, 2026

16. According to the IRS, the donor is generally responsible for paying gift tax, although under special arrangements the recipient may pay it; gifts that are not more than the annual exclusion for the year are generally not taxable gifts, and the exclusion applies to each recipient; the IRS publishes a table of the exclusion for each year; and the gift tax return is Form 709.

    Sources 7 · Frequently asked questions on gift taxes: 'Who pays the gift tax? The donor is generally responsible for paying the gift tax'; 'Under special arrangements the donee may agree to pay the tax instead'; 'Gifts that are not more than the annual exclusion for the calendar year'; 'The annual exclusion applies to gifts to each donee'; 'The table below shows the annual exclusion amount applicable in the year of the gift'; 'gift tax return (Form 709)' · Checked October 17, 2026

17. According to the IRS, if you are a US person for tax purposes and receive a large gift from a foreign person, you have to complete Part IV of Form 3520; for gifts from a nonresident alien, you report only if what you received from that person (and people related to them) exceeds $100,000 in the year; it is generally due by April 15; and filing late or incomplete can bring penalties.

    Sources 8 · Gifts from foreign person: 'who received a large gift or bequest from a foreign person, you need to complete Part IV of Form 3520'; 'For gifts or bequests from a nonresident alien or foreign estate, you are required to report the receipt of such gifts or bequests only if the aggregate amount received from that nonresident alien or foreign estate'; 'exceeds $100,000 during the taxable year'; 'generally, April 15th for individuals'; 'you may be subject to penalties' · Checked October 17, 2026

18. Freddie Mac says you should typically be prepared to pay between 2% and 5% of the home purchase price in closing costs.

    Sources 9 · What Are Closing Costs and How Much Will I Pay?: 'Typically, you should be prepared to pay between 2% and 5% of the home purchase price in closing fees.' · Checked October 17, 2026

19. The CFPB warns that during closing, scammers send spoofed emails posing as the real estate agent, settlement agent or another trusted person and try to divert your closing costs and down payment with last-minute changes to wiring instructions; it recommends never following instructions contained in an email, avoiding phone numbers or links in an email, and confirming the instructions, including the account name and number; and if it happens, asking your bank right away for a wire recall and filing a complaint at ic3.gov.

    Sources 10 · Mortgage closing scams: How to protect yourself and your closing funds (June 3, 2019): 'divert your closing costs and down payment into a fraudulent account by confirming or suggesting last-minute changes to your wiring instructions'; 'posing as the real estate agent, settlement agent, legal representative or another trusted individuals'; 'Never follow instructions contained in an email'; 'including the account name and number'; 'Avoid using phone numbers or links in an email'; 'Ask for a wire recall'; 'www.ic3.gov' · Checked October 17, 2026

20. According to the CFPB, many states and local organizations offer programs to help first-time buyers with a down payment or closing costs; to find them it suggests looking up a HUD-approved housing counseling agency in your area or calling the HOPE Hotline, 24 hours a day, seven days a week, at (888) 995-4673.

    Sources 11 · Where can I find information on programs for first-time home buyers? (reviewed Sept. 13, 2024): 'Many states and local organizations offer programs to help first-time buyers with a down payment or closing costs'; 'look up a HUD-approved housing counseling agency in your area'; 'HOPE™ Hotline, 24 hours a day, seven days a week, at (888) 995-HOPE (4673)' · Checked October 17, 2026

21. HUD-approved housing counselors give independent advice on buying a home, renting, defaults and credit, often at little or no cost.

    Sources 12 · Find a Housing Counselor: 'Housing counselors throughout the country can provide advice on buying a home, renting, defaults, forbearances, foreclosures, and credit issues'; 'they can offer independent advice, often at little or no cost to you' · Checked October 17, 2026