What is a down payment gift letter?

A down payment gift letter is a signed document from the person giving you money confirming: (1) the funds are a gift, not a loan, (2) no repayment is required, (3) the donor's relationship to the buyer, and (4) the source of the gift funds. Lenders require this letter to verify gift funds are legitimate and won't affect your debt-to-income ratio.

Who can give a gift for a down payment?

FHA loans accept gifts from family members, close friends, employers, labor unions, and charitable organizations. Conventional loans (Fannie Mae/Freddie Mac) accept gifts from family members only (parents, siblings, grandparents, aunts/uncles, spouses, domestic partners). VA and USDA loans accept gifts from any source.

What is the IRS gift tax limit for 2026?

For 2026, the IRS annual gift tax exclusion is $18,000 per person per year. Two parents can give $36,000 combined. Amounts above $18,000 require filing IRS Form 709, but the donor rarely owes actual tax unless they've exceeded the $13.61 million lifetime exemption. The recipient (home buyer) never pays gift tax.

How long before closing should gift funds be in my account?

For conventional loans, gift funds in your account for 60+ days are "seasoned" and may not require a gift letter. For FHA loans, gift funds transferred within 60 days of closing require a gift letter AND documentation of the transfer. Safest approach: have gift funds transferred at least 3 months before your loan application.

Can 100% of my down payment be a gift?

Yes, for FHA loans, 100% of the down payment can come from gift funds. For conventional loans on a primary residence, 100% can be a gift. Investment properties require at least 15% from the borrower's own funds.

Updated February 18, 2026

Down Payment Gift Letter Template 2026

Free, lender-approved gift letter template. Copy, fill in the blanks, and submit to your lender. Includes IRS gift tax rules, common mistakes, and what lenders actually verify.

Jump to Template ↓Get Pre-Approved →

QUICK ANSWER: What is a mortgage gift letter?

A mortgage gift letter is a signed statement confirming the money is a gift — not a loan — and no repayment is required. It must include: donor name, relationship to buyer, gift amount, property address, and a no-repayment statement. Use our free template below.

2026 IRS Gift Limit

$18,000/person

No gift tax return below this

FHA Gift Rules

100% allowed

Entire down payment can be a gift

Seasoning Period

60 days

Funds in account = no letter needed

Free Down Payment Gift Letter Template

Copy the template below, fill in the bracketed fields, and have your donor sign it. Accepted by Fannie Mae, Freddie Mac, FHA, VA, and USDA lenders.

✓ Lender-Approved FormatUpdated Feb 2026

MORTGAGE DOWN PAYMENT GIFT LETTER

Date: [DATE]

To: [LENDER NAME]
Re: Gift of Funds for Down Payment

I/We, [DONOR FULL NAME(S)], hereby certify that I/we are providing a monetary gift of $[GIFT AMOUNT] to [BORROWER FULL NAME(S)] for the purpose of purchasing the property located at:

[PROPERTY ADDRESS], [CITY, STATE, ZIP]

I/We certify the following:

1. This gift does NOT need to be repaid. There is no expectation of repayment, and no promissory note, lien, or other agreement exists or will exist regarding this gift.

2. The gift funds are being transferred from:
   Donor Bank Name: [BANK NAME]
   Account Type: [CHECKING/SAVINGS] (Last 4 digits): XXXX-[LAST 4]

3. The relationship between the donor(s) and borrower(s) is:
   [RELATIONSHIP — e.g., Parent and Child]

4. The source of these gift funds is:
   [SOURCE — e.g., personal savings, sale of stock, inheritance]

5. These funds are NOT being provided by any party to the real estate transaction (seller, real estate agent, builder, or lender).

Donor Signature: _______________________
Donor Printed Name: [DONOR FULL NAME]
Donor Address: [STREET ADDRESS, CITY, STATE, ZIP]
Donor Phone: [PHONE NUMBER]
Donor Email: [EMAIL]
Date: [DATE]

How to Use This Template

Copy the template into a Word document or Google Doc
Replace all bracketed fields [LIKE THIS] with actual information
Have the donor(s) sign and date the letter
Submit to your lender along with bank statements showing the transfer
Respond promptly if your lender requests additional documentation

Who Can Give a Down Payment Gift? (By Loan Type)

Loan Type	Acceptable Donors	100% Gift?
FHA Loan	Family, close friends, employer, labor union, charitable org	✓ Yes
Conventional (Fannie/Freddie)	Family members only (parents, siblings, grandparents, spouse)	✓ Yes (primary home)
VA Loan	Any source (family, friends, organizations)	✓ Yes
USDA Loan	Any source	✓ Yes
Investment Property	Family members	✗ No (min 15% own funds)

IRS Gift Tax Rules for 2026

The home buyer (recipient) never pays gift tax. Only the donor could potentially owe tax, and even then it's rare:

$18,000 annual exclusion per person

A parent can give $18,000 with no paperwork. Two parents = $36,000 combined. No Form 709 required.

Above $18,000: File Form 709 (but rarely owe tax)

Gifts above $18,000 require IRS Form 709. Actual tax is only owed if the donor exceeds the $13.61M lifetime exemption.

Married couples can double the exclusion

Gift splitting allows married donors to give $36,000 per recipient per year ($18K each).

Recipient never pays gift tax

The home buyer has zero tax liability. Gift tax is always the donor's responsibility.

7 Gift Letter Mistakes That Delay Your Closing

✗

Missing the "no repayment" statement

Fix: Every gift letter MUST explicitly state the funds are a gift and no repayment is required. Without this, lenders treat it as a loan and add it to your DTI.

✗

Wrong donor relationship for loan type

Fix: Conventional loans only accept family members. FHA is broader. Verify your loan type's rules before listing the donor.

✗

No bank statement showing the transfer

Fix: The gift letter alone isn't enough. Lenders need a bank statement showing funds leaving the donor's account AND entering yours.

✗

Cash gifts (no paper trail)

Fix: Never accept cash gifts for a down payment. Lenders can't verify the source. Always use wire transfer or check.

✗

Donor is a party to the transaction

Fix: The seller, real estate agent, or builder cannot give you a "gift." That's a seller concession — a completely different thing.

✗

Undisclosed gift funds

Fix: Never hide gift funds. Lenders review all large deposits. Undisclosed gifts can be considered mortgage fraud.

✗

Letter dated too early

Fix: Date the letter within 60-90 days of closing. Some lenders reject letters dated more than 90 days before closing.

How to Avoid Needing a Gift Letter (Seasoning)

If gift funds have been in your bank account for 60+ days, they're "seasoned" — most lenders won't require a gift letter.

Have your donor transfer funds at least 3 months before you apply for a mortgage. The funds will appear as regular savings on your bank statements.

Seasoning Timeline:

Gift receivedDay 0

Appears on bank statementDay 1-30

Fully seasoned (no letter needed)Day 60+

Safe to apply for mortgageDay 90+

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Frequently Asked Questions

Does a gift letter need to be notarized?

Most lenders do NOT require notarization. A signed letter with donor contact information is typically sufficient. Some lenders may request notarization for very large gifts (over $50,000). Always confirm with your specific lender.

Can I use gift money for closing costs too?

Yes. Gift funds can be used for both the down payment and closing costs on FHA, VA, and USDA loans. Conventional loans also allow gift funds for closing costs. You'll need a gift letter covering both amounts.

What if my donor won't provide bank statements?

The donor only needs to show funds leaving their account — not their full financial picture. They can provide a single-page bank statement showing just the transfer. A certified check from their bank is another option.

Can my employer give me a gift for a down payment?

FHA loans allow employer gifts. Conventional loans do not — only family members qualify. If your employer wants to help, a bonus (which counts as income after 2 years) is an alternative.

What happens if I lie on a gift letter?

Falsifying a gift letter is mortgage fraud — a federal crime. If the "gift" is actually a loan, it affects your DTI and ability to repay. Always be truthful; if it's a loan, disclose it as a loan.