Gift Funds for Mortgage 2026: Complete Guide (Letter Template)

Q: Who can give gift funds for a mortgage?

Acceptable gift donors vary by loan type. FHA: Family members, employers, labor unions, close friends with documented relationship, charitable organizations. Conventional: Family members only (spouse, parent, grandparent, sibling, aunt/uncle, in-laws, domestic partner). VA: Family, friends, employers. The gift CANNOT come from anyone with interest in the transaction (seller, real estate agent, builder).

Q: What is a mortgage gift letter?

A mortgage gift letter is a signed document stating: (1) The gift amount, (2) Donor's name, address, phone, (3) Donor's relationship to borrower, (4) Property address, (5) Statement that NO repayment is expected. Both donor and borrower must sign. Lenders require this to prove the money is a gift, not a loan.

Q: Can 100% of my down payment be a gift?

It depends on loan type and down payment amount. FHA: Yes, 100% can be gift. VA: Yes, 100% can be gift. Conventional with 20%+ down: Yes, 100% can be gift. Conventional with <20% down: Borrower must contribute at least 5% from own funds (some exceptions). Always verify with your lender.

Donor Type	FHA	Conventional	VA
Parents/Grandparents	✅	✅	✅
Siblings	✅	✅	✅
Aunts/Uncles	✅	✅	✅
In-Laws	✅	✅	✅
Domestic Partner	✅	✅	✅
Close Friends	✅*	❌	✅
Employer	✅	❌	✅
Seller/Agent/Builder	❌	❌	❌

Donor Type

FHA

Conventional

Parents/Grandparents

✅

Siblings

✅

Aunts/Uncles

✅

In-Laws

✅

Domestic Partner

✅

Close Friends

✅*

❌

✅

Employer

✅

❌

✅

Seller/Agent/Builder

❌

📝 Gift Letter Template

GIFT LETTER

Date: _______________

To Whom It May Concern:

I/We, [Donor Name(s)], intend to give a gift of $[Amount] to [Borrower Name(s)]to be used toward the purchase of the property located at:

[Property Address]

My relationship to the borrower is: [Relationship]

I hereby certify that this gift requires NO repayment and there is no expectation of repayment in any form.

The source of these funds is: [Savings/Investments/etc.]

Donor Signature

Donor Name (Print)

Donor Address

Donor Phone

Borrower Signature

Borrower Name (Print)

💡 Tip: Your lender may have their own template. Always ask first.

Documentation Required

Lenders need to verify that gift funds are legitimate. Here's what you'll need:

📋 Gift Fund Documentation Checklist

✅ Signed gift letter (from donor AND borrower)
✅ Donor's bank statement showing funds available
✅ Proof of transfer (wire confirmation, canceled check)
✅ Your bank statement showing deposit received
✅ Paper trail — funds must be traceable

Timing of Gift Fund Transfer

When should the gift be transferred? It depends:

Before application: Gift should be in your account 60+ days (becomes "seasoned")
During process: Requires full documentation (letter, statements, proof of transfer)
At closing: Can be wired directly to escrow/title company

Best practice: Transfer gift funds early and let them "season" in your account for 60 days. This simplifies documentation.

How Much Can Be Gifted?

Loan Type	Down Payment	Max Gift %
FHA	Any	100%
VA	Any	100%
Conventional	20%+	100%
Conventional	10-19%	Varies*
Conventional	<10%	Borrower needs 5%

*Rules vary by lender and property type. Always verify.

Tax Implications of Gift Funds

💰 2026 Gift Tax Rules

Annual exclusion: $18,000 per person, per recipient (2026)
Married couple: Can give $36,000 together ($18K each)
Over the limit? Donor files Form 709, counts against lifetime exemption
Lifetime exemption: $13.61 million (2026) — most people never hit this
Recipient: You (borrower) pay NO tax on gifts received

Example: Parents want to gift $50,000. Mom gives $18K, Dad gives $18K = $36K tax-free. Remaining $14K counts against their lifetime exemption (no tax due).

Common Mistakes to Avoid

Large cash deposits — Don't deposit cash; use traceable transfers
Missing paper trail — Every dollar must be documented
Gift from prohibited source — Seller, agent, builder = NOT allowed
Incomplete gift letter — Must include "no repayment expected"
Last-minute transfers — Give yourself time for documentation
Mixing gift with loan — If ANY repayment expected, it's a loan, not gift

Frequently Asked Questions

Who can give gift funds for a mortgage?

FHA: Family, employers, close friends, charities. Conventional: Family members only. VA: Family, friends, employers. Never from seller, agent, or builder.

What is a mortgage gift letter?

A signed document stating the gift amount, donor info, relationship, property address, and that NO repayment is expected. Both donor and borrower must sign.

Can 100% of my down payment be a gift?

FHA and VA: Yes, 100% can be gift. Conventional with 20%+ down: Yes. Conventional with less than 20% down: Borrower may need to contribute 5% from own funds.

Gift Funds for Mortgage 2026: Complete Guide

⚡ Quick Facts

Who Can Give Gift Funds?