Can Gift Funds Be Used to Buy a Home?

Yes, many mortgage programs allow gift funds. The eligible donor, permitted use, required borrower contribution, and documentation depend on the program and property. Under Fannie Mae guidelines, an acceptable personal gift may be used for a principal residence or second home, but not an investment property.

What matters most

• The gift must be a true gift, not an undisclosed loan that must be repaid.
• The lender may require a gift letter and evidence of the donor’s ability and the transfer of funds.
• Move the money only after the lender explains the cleanest documentation path.

How to use this answer

Tell the lender about the gift early, including who will give it, the amount, and when it will be available. A last-minute cash deposit or transfer with no paper trail can delay underwriting. Different rules apply to gifts of equity, grants, wedding gifts, and employer assistance.

A simple example

A parent plans to give a buyer $15,000. The loan team may ask for a signed gift letter and proof showing the funds leaving the donor’s account and entering the buyer’s account or being sent directly to closing. The exact paper trail depends on the program and transfer method.

What to review before you decide

• Confirm the loan program, occupancy, property type, and timeline.
• Review the complete payment and cash-to-close estimate, not one number in isolation.
• Verify current program rules and lender requirements before moving money or signing a contract.