How to Use a Gift for Your Down Payment

Gift money can be your down payment, but the lender will require proof it is a gift, not a loan

Most mortgage lenders allow you to use money someone gives you toward your down payment. The lender's main concern is whether you are borrowing that money — because borrowed funds count as debt and change your debt-to-income ratio. A true gift does not count as debt, so it strengthens your application. But you will need to document it.

The lender will ask for a gift letter from the person giving you the money. This is a signed statement saying the money is a gift, not a loan, and that the giver does not expect repayment. You will also need to show the money moving from their account to yours — usually a bank statement or wire transfer confirmation. Without both, the lender will treat the money as a loan you took out, which can disqualify you or raise your interest rate.

The gift can come from a family member, a close friend, or in some cases an employer or nonprofit. It cannot come from the seller, the real estate agent, or anyone with a financial stake in the sale closing. Some lenders have additional rules about who can give a gift — ask your lender before accepting money from anyone outside your immediate family.

Key Takeaways

• You must provide a gift letter signed by the person giving you the money, stating it is a gift and not a loan you will repay.
• The lender will ask to see the money move from the giver's bank account to yours, so keep bank statements and wire confirmations.
• The gift cannot come from the seller, the real estate agent, or anyone else with a financial interest in the sale.
• Some lenders restrict gifts to family members or require the giver to have a documented relationship to you — check your lender's rules before accepting money.
• A gift can cover your entire down payment or part of it; any remaining amount must come from your own savings or other allowed sources.

What the lender needs in the gift letter

The gift letter is a simple document, but it must include specific information. The lender has a template or will tell you what to include. At minimum, the letter should state the giver's name and address, your name, the amount of the gift, and the date. It must say clearly that the money is a gift and that no repayment is expected.

The letter must be signed and dated by the person giving the gift. Some lenders require it to be notarized — ask your lender whether a notary is needed. If the gift comes from someone who is not a blood relative or spouse, the letter should also explain your relationship to that person (for example, "longtime family friend" or "employer").

Keep the original signed letter and give a copy to your lender. Do not write the letter yourself and ask the giver to sign it — the lender wants to see that the giver wrote it or at least reviewed and approved the wording. If you are unsure, ask your lender for a template or sample letter.

Showing the money in your bank account

After the gift letter is signed, the giver will transfer the money to you. The lender will want to see this transfer happen — usually within a certain timeframe before closing, often 10 to 60 days depending on the lender. If the money sits in your account for too long without explanation, the lender may ask where it came from, so timing matters.

If the money is wired, keep the wire confirmation showing the sender's name, the amount, and the date it arrived in your account. If it is a check, deposit it and keep the deposit receipt and bank statement showing the deposit. If the giver deposits it directly into your account, a bank statement showing the deposit is enough.

The lender will review your bank statements from the last two months or so. They are looking for the gift deposit and checking that you did not borrow the money from somewhere else. If you have other large deposits during this period, be ready to explain them — the lender will ask.

Gifts that cover part of the down payment

You do not have to use a gift for the entire down payment. You can combine a gift with your own savings. If you are putting down 20 percent and the gift covers 10 percent, you need to show that the other 10 percent came from your own funds — usually savings you have had for at least two months.

The lender will want to see that your own money has been in your account for a while, to confirm it is not borrowed. This is called seasoning — the money needs time to settle and show it is truly yours. Two months is the standard, though some lenders require longer. If you just received a bonus or inheritance that you are using as your portion, tell your lender and provide documentation of where it came from.

If you are combining multiple sources — a gift, your savings, and perhaps a grant or assistance program — keep clear records of each source. Your lender will ask you to account for every dollar, so separate deposits make this easier.

When the gift comes from outside the United States

If the giver lives outside the US or is sending money from a foreign bank account, the process is more complex. The money will likely be wired internationally, which takes longer and may involve currency conversion. The lender will still need the gift letter and proof of the transfer, but they may also ask for additional documentation about the source of the funds — this is part of anti-money-laundering rules that lenders must follow.

Ask your lender about their rules for international gifts before the money is sent. Some lenders have restrictions or require extra paperwork. If you are using a wire service like Western Union or MoneyGram, keep all receipts and confirmations. If the money is wired through a bank, the wire confirmation from your bank is your proof.

Gifts and down payment assistance programs

If you are also using a down payment assistance program — a grant, a loan, or a matched savings account — check whether that program allows gifts. Most do, but some have rules about the total amount you can receive from all sources combined, or they may require that a certain percentage of the down payment come from your own savings.

If you are using both a gift and an assistance program, tell both your lender and the assistance program administrator. They need to know the full picture of where your down payment money is coming from. The gift letter and bank statements will satisfy both.

Frequently Asked Questions

Can a gift come from someone I just met?

Most lenders require a documented relationship between you and the giver. A gift from a stranger raises red flags about whether the money is actually yours or whether you are part of a scheme to hide the source of funds. Stick to family, close friends, employers, or nonprofits you have a real connection to. Ask your lender what relationships they accept.

What if the giver wants to give me the money in cash?

Cash gifts are difficult because the lender cannot trace them. If you receive cash, deposit it into your bank account and keep the deposit receipt. The lender will see the deposit on your bank statement, but they may ask where the cash came from. You will need the gift letter to explain. Some lenders are hesitant about large cash deposits because of money-laundering concerns, so ask your lender first.

Does the gift have to be deposited before I make an offer on the house?

No. You can make an offer before the gift is deposited. But the lender will want to see the money in your account during the mortgage process, usually within 60 days of your application. Coordinate with the giver so the money arrives in time for your lender to review it before closing.

Can my parents give me a gift if they are also co-signing my mortgage?

Yes, but the lender will scrutinize it more closely. If your parents are co-signing, they are already taking on risk, so the lender wants to make sure the gift is not part of a scheme to hide debt or inflate your finances. The gift letter and bank statements become even more important. Be transparent with your lender about the relationship.

What if I receive the gift but decide not to use it for the down payment?

You can keep the money and use it for closing costs, inspections, appraisals, or other homebuying expenses. Or you can simply keep it as savings. Once the money is in your account, it is yours. The lender only cares that you documented where it came from so they know it is not a hidden loan.