Skip to content
HomeMortgageOnline
See today's rates Rates
Guide

Gift Letters for a Mortgage: Rules and Documentation

Sealed envelope, pen, and house key on a bright kitchen table

A mortgage gift letter names the donor, the amount, and that repayment is not expected, with extra proof for Fannie Mae, FHA, and VA.

Published: 2026-10-19

Key takeaways

  • The letter names the donor, gives an address and phone number, states the relationship and the dollar amount, and says no repayment is expected.
  • Fannie Mae accepts gifts on a principal residence or a second home from relatives and from a short list of people with a familial relationship. Gifts are not allowed on an investment property.
  • FHA accepts gifts from family, an employer or labor union, a documented close friend, a charity, or a qualifying government program. The donor and the borrower both sign and date the letter.
  • VA accepts a gift from a donor who has no tie to the builder, developer, real estate agent, or any other interested party. Gift funds cannot meet reserve requirements.

Published: 2026-10-19

A gift letter tells the lender the money is a gift, who gave it, and that you do not have to pay it back. Without that letter and a paper trail from the donor's account to you or to the closing agent, the lender cannot treat the funds as a gift.

Fannie Mae, FHA, and VA each publish their own donor list and document rules.

What does the letter have to say?

Use this checklist. Signature rules differ by program, and those are called out below.

  • Donor's full name
  • Donor's address
  • Donor's telephone number
  • Donor's relationship to you
  • Dollar amount of the gift
  • A direct statement that no repayment is expected
  • Donor's signature

Fannie Mae lets the letter state the actual amount or a maximum, and the donor signs it. If the money comes from a trust or an estate of an acceptable donor, the letter also names that account. FHA requires the donor and the borrower to sign and date the letter. VA specifies the same contents and does not add a signature rule of its own. If the lender's form has signature lines, sign them.

Use a plain line such as "This is a gift. I do not expect repayment."

White piggy bank beside a house key on a kitchen counter

Who can give the money?

On a Fannie Mae loan for a principal residence or a second home, a donor is a relative, or a non-relative with a familial relationship. A relative is a spouse, child, or other dependent, or anyone related by blood, marriage, adoption, or legal guardianship. The non-relative list is a domestic partner or their relative, a person engaged to marry the borrower, a former relative, or a person with a long-standing familial-like or mentorship relationship. The donor may not be, or be affiliated with, the builder, developer, real estate agent, or any other interested party. A seller who is an acceptable donor and is not affiliated with any other interested party may give funds. Gifts are not allowed on an investment property, and a gift of equity may not fund reserves.

FHA, for both TOTAL and manual underwriting, accepts a family member, an employer or labor union, a close friend with a clearly defined and documented interest, a charitable organization, or a government or public homeownership program for low- or moderate-income families or first-time buyers. HUD's family-member definition, regardless of sex or legal marital status, includes a child, parent, or grandparent (including step and foster), a spouse or domestic partner, an adopted son or daughter including a child placed for adoption, a foster child, a brother, stepbrother, sister, or stepsister, an uncle or aunt, and in-laws. Only a family member may give a gift of equity, and only to another family member. Cash on hand is not an acceptable donor source. On a manually underwritten FHA loan, surplus gift funds may not count as cash reserves. The FHA loan guide covers the rest of the program.

VA allows a gift from a donor with no affiliation with the builder, developer, real estate agent, or any other interested party. Gift funds cannot meet reserve requirements. The VA loan guide covers the guaranty.

How much of the down payment can be a gift?

Fannie Mae allows gifts for the down payment, closing costs, or reserves, with one own-funds test based on LTV, CLTV, or HCLTV. At 80 percent or less, on a one- to four-unit principal residence or a second home, none of the funds have to be the borrower's. Above 80 percent, a one-unit principal residence works the same way. Above 80 percent on a two- to four-unit principal residence or a second home, the borrower first puts in 5 percent of their own funds. A gift from an acceptable donor who lived with the borrower for the past 12 months can count as those own funds if both will occupy the new home, with the donor's certification and shared-address documents such as a license, a bill, or a bank statement.

The size of the down payment is a separate choice in how much down payment do you really need. First-time buyers can start with the first-time homebuyer guide.

FHA ties any gift of the borrower's minimum required investment to extra source rules in the handbook. VA does not publish a dollar cap in the gift-funds paragraph of Chapter 4. It does bar the gift from counting toward required reserves.

If the purchase is an assumption of an existing FHA, VA, or USDA loan, the gift may be the cash that pays the seller's equity. Those steps are in assumable mortgages.

How does the lender trace the funds?

Fannie Mae requires proof that enough money is still in the donor's account or has already moved. That proof can be the donor's check and the borrower's deposit slip, a withdrawal slip and a deposit slip, an electronic transfer, a copy of the donor's check to the closing agent, or a settlement statement. At closing, the lender documents an electronic transfer or an official check. If the amount differs from the Desktop Underwriter casefile, the lender may need to resubmit it.

FHA wants the same trail. Before settlement, pair the donor's withdrawal, canceled check, or electronic transfer with the deposit into the borrower's account. At settlement, use an electronic transfer or an official bank check to the settlement agent. The mortgagee must be able to tell that the gift did not come from an unacceptable source.

VA requires proof that the gift reached the borrower's account, or that the closing agent received it. Acceptable records are the borrower's deposit, a copy of the donor's check or electronic transfer, or the Closing Disclosure. Give the lender the letter early. A deposit with no matching donor withdrawal is unfinished.

Bring the letter and the transfer record before the closing package is final. The down-payment and first-time buyer guides show where that cash fits.

A low appraisal can change how much cash that gift has to cover. See Low Appraisal? Your Options When the Value Comes In Short.

This article is educational and is not a loan offer or financial advice.

Sources

Frequently asked questions

Can a friend give the down payment?

Only if the friend fits that program's donor list. Fannie Mae uses the familial categories above, FHA wants a documented close friend, and VA bars any tie to an interested party.

Can the seller give the gift?

Fannie Mae allows it when the seller is an acceptable donor with no other interested-party tie. An FHA seller credit for closing costs is an interested-party contribution, which is a different rule from a family gift.

Do both people sign?

The donor signs for Fannie Mae. FHA also requires the borrower's signature and the date. Sign every line on the lender's form.

What if the gift arrives at closing?

Fannie Mae and FHA want an electronic transfer or an official check to the closing agent. VA also accepts the Closing Disclosure showing the donor's funds arrived.

Can the gift count as reserves?

VA says no. Manual FHA underwriting does not count surplus gift funds as reserves. Fannie Mae allows gifts toward reserves except for the borrower's own 5 percent, and a gift of equity cannot be reserves.