Can you use a family gift for your move-up down payment?
Yes. On conventional loans that follow Fannie Mae guidelines, a gift can come from a relative or someone with a close family-type relationship, such as a domestic partner or fiancé. The donor signs a gift letter stating the amount and that no repayment is expected, and your lender documents the transfer of funds. For a one-unit primary residence, Fannie Mae doesn’t require a minimum contribution from your own funds. Gifts can’t come from the builder, seller’s agent, or other interested parties, and gifts aren’t allowed for investment properties.
Sometimes the gap between selling and buying is a timing problem, not a wealth problem. Your equity is tied up in the current home, and a parent offers to help with the down payment on the next one.
Gift funds can work well, but lenders need them documented carefully. Here’s how it works. For the full move-up plan, see our guide to home equity and move-up planning.
Who can give
According to Fannie Mae’s guidelines, acceptable donors include:
- Relatives: spouse, child, parent, or anyone related by blood, marriage, adoption, or legal guardianship
- Close non-relatives: a domestic partner, fiancé or fiancée, a former relative, or someone with a long-standing family-type relationship
The donor cannot be the builder, developer, real estate agent, or another interested party to the transaction.
FHA, VA, and jumbo loans have their own gift rules. Ask your lender which apply.
The gift letter
The donor signs a letter that includes:
- The gift amount, or the maximum amount
- A statement that no repayment is expected
- The donor’s name, address, phone number, and relationship to you
Documenting the transfer
Lenders need to see that the money came from the donor and reached you or escrow. Common options include:
- The donor’s check and your deposit slip
- A withdrawal slip from the donor and your deposit slip
- An electronic transfer to your account or directly to escrow
- A check from the donor to the closing agent
Tip: Talk with your lender before any money moves. A large, undocumented deposit can slow underwriting.
A “gift” that must be repaid isn’t a gift
If the money is really a loan, it must be treated as debt, and it may affect your qualifying ratios. Be honest with your lender about the arrangement.
Gifts vs. other ways to fill the gap
| Source | Consider |
|---|---|
| Family gift | No repayment; documentation required |
| Sale proceeds | Requires selling first or timing closings |
| HELOC or bridge loan | Payment may count in your ratios |
| 401(k) loan | Job change risk; lost growth |
Here’s how a 401(k) loan or withdrawal compares, and how to decide how much to put down.
Gift tax questions
Large gifts may have federal gift tax reporting requirements for the donor. The donor should talk with a tax adviser.
Steps to take
- Tell your lender early that you’ll use gift funds
- Get the lender’s gift letter form
- Plan how and when the money will move
- Keep statements showing the transfer
- Include it in your pre-approval. Here’s the difference between pre-approval and pre-qualification.
Frequently Asked Questions
Who can give me money for a down payment?
On Fannie Mae conventional loans, relatives and people with a close family-type relationship, like a domestic partner or fiancé, can give gift funds. Interested parties, like the builder or an agent, can’t.
What needs to be in a gift letter?
The gift amount, a statement that no repayment is expected, and the donor’s name, address, phone number, and relationship to the borrower.
Do I need to put any of my own money down if I get a gift?
For a one-unit primary residence, Fannie Mae doesn’t require a minimum contribution from the borrower’s own funds. Other loan programs may differ.
Can gift funds be used for an investment property?
Not on Fannie Mae conventional loans. Gifts are not allowed for investment properties.
Does the person giving me money have to pay gift tax?
Large gifts may require federal gift tax reporting by the donor. The donor should consult a tax adviser.
Let family help, the right way
A family gift can make a move-up possible sooner. With the right paperwork, it’s one of the simplest ways to bridge the gap.
If you’d like help planning your move-up financing and timeline, schedule a move-up strategy conversation with The Barnard Group.
About Josh Barnard Josh Barnard is the founder of The Barnard Group and has spent over 20 years helping families navigate some of life’s biggest moments through real estate. Known for his “Work Hard. Be Kind.” approach, Josh combines expert market knowledge, innovative marketing, and genuine care to help homeowners make confident decisions about their next chapter. Whether someone is buying their first home, moving up, downsizing, or relocating to Pierce County, his mission is simple: serve people well, create unforgettable experiences, and help families build a life they love.
Researched October 17, 2026. Loan rules vary by program and lender. This is general information, not tax or financial advice.
