BuyerGeneral December 17, 2020 **For many first time buyers, saving for a down payment is one of the most challenging steps in fulfilling their dream of purchasing a home. Oftentimes, they know they can afford their potential monthly mortgages (which could be less or equal their current rents), but the upfront costs of buying, such as down payment and closing costs, may be too much for them to pay.**  This is why it's possible to get a little help in the form of a down payment gift from a family member or relative, close friend, or even a charitable organization. And it’s actually becoming more popular, especially among millennials. In the National Association of REALTORS® [2020 Generational Trends Report](https://www.nar.realtor/sites/default/files/documents/2020-generational-trends-report-03-05-2020.pdf), 13 percent of home buyers (and 27 percent for ages 22 to 29) indicated their source of down payment to be a gift from their relative or friend. So if you’re lucky enough to find down payment fund as one of your gifts under the Christmas tree this year (or maybe you’re the one who wants to give it), it may not be as simple as opening your cash gift (or handing someone a wad of cash) and going straight to the lender to use it to buy a home. Down payment gift funds, whether you’re giving or receiving it, are closely regulated by lenders and must meet certain requirements. Here are certain rules that the gift giver and recipient should know to avoid trouble down the road.  While we may automatically consider a family member, like parents or siblings, when thinking about who can give a mortgage down payment gift, there are other entities who could also be eligible gift sources. But because cash can come with strings attached, and lenders want to make sure that the gift money is nothing but a gift (which will be discussed later on), there are restrictions on who can give money (or who you can give money to) to help purchase a home. ### **For conventional loans** If you are getting a loan through Fannie Mae or Freddie Mac, gifts can only be from a family member or relative. This may be your spouse, child, siblings, parents, grandparents, or anyone related by blood, marriage, adoption, or legal guardianship. Soon-to-be family members such as your domestic partner, fiancé, or even future in-laws are also eligible to give funds for a down payment. ### **For FHA loans** The Federal Housing Administration (FHA) has its own set of rules when it comes to giving or receiving down payment gifts, although they offer a broader eligibility range. If you are getting an FHA loan, you can receive down payment funds from family members, friends who have a clearly defined and documented interest in your life, employers, labor unions, government agencies, and even charitable organizations. ### **For USDA and VA home loans** VA loans (backed by the U.S. Department of Veterans Affairs) and USDA mortgages (given by the U.S. Department of Agriculture)may have fewer restrictions, but the down payment gift funds cannot come from anyone who would benefit from the proceeds of the purchase, such as the seller, developer, builder, your real estate agent, and some other entity.  There are no limits on the amount of money someone can give you for a down payment or to cover closing costs. However, rules still apply depending on the type of loan and property you're purchasing. Some types of loans may need you to contribute a certain amount of the down. The key is to check with your lender for the latest regulations on how much you can really use. Likewise, there can be tax implications on the person giving the gift funds. They may be liable if the amount exceeds the gift tax exclusion limit. As of 2020, for instance, any individual can give funds up to $15,000 without a tax penalty. On the other hand, parents who are married and are filing jointly can give up to $30,000 per child for a mortgage down payment (or any other purpose), without incurring the gift tax. For a down payment gift that exceeds the said amounts, the donor must file a gift tax return to disclose the gift.   - **You need to confirm the relationship between you and the giver and provide the right paperwork.** If you're fortunate enough to have a family member or any eligible entity who can give you funds towards your home’s down payment, you’ll need to confirm your relationship with the gift-giver and provide your mortgage underwriter more information about where the funds came from. For lenders to confirm that the new money isn’t a loan, you’ll need these things: **1\. A down payment gift letter -** If your lender has a template letter for this purpose, you will need to send it to the funds’ donor. If there isn’t a template, you might want to ask what information should be included so you can draft your own. The letter typically includes details about the gift-giver, such as the name, address, contact phone, relationship to the borrower, and address of the property to be purchased. The date when the gift was transferred and the amount of funds given to the borrower must also be indicated. The donor should also write a sentence explaining that the fund is a gift and that there isn’t any expectation of repayment. The letter must be signed by both the gift-giver and the borrower. **2\. The gift-giver’s bank statements -** This is to show they have the funds to give the buyer as much money as promised. **3\. A bank slip from the buyer’s account -** This is to indicate when the money was transferred, to verify that the cash is from a legitimate source and that the borrower has an appropriate relationship with the donor, and to confirm the information provided in the letter.  - **Remember: you can't pay back the gift.** Down payment gift funds need to be just like that—a gift and not a loan that is expected to be paid. You need to make it clear with your mortgage lender that the money you received was entirely gifted and not something that you need to pay back eventually, because by then it will be considered mortgage or loan fraud. Besides, it can also put your loan qualification at risk since your debt-to-income ratio will be factored when you get a mortgage.  - **Try to make it a “seasoned” gift money.** It might make more sense to try and make your gift money “seasoned”, especially if you know that someone is going to help you buy a home (often in the case of parents or other relatives). Lenders refer to it as seasoned money when it has been sitting in your bank account for some time, at least for two months. When the gifted money is given in advance, you often don't have to worry about writing gift letter documentation. ### **Bottom Line** Down payment gift funds make it easier for first-time home buyers to afford a home. If you anticipate accepting help, remember to consider the rules above so you can accept such a gift in a proper manner. Be upfront with your mortgage lender if you plan on using gift funds for the down payment. Don't forget to also talk to the individual or entities who are planning to give you money about the tax implications and other considerations. #### Suggested Blogs [  **From Date Nights to Mortgage Payments: Tips for Couples Buying Their First Home Together**](https://www.bsmithgroup.com/blog/2026/2/10/from-date-nights-to-mortgage-payments-tips-for-couples-buying-their-first-home-together)[  **Is the Washoe County housing market still a seller’s market heading into Spring 2026?**](https://www.bsmithgroup.com/blog/2026/1/29/is-the-washoe-county-housing-market-still-a-sellers-market-heading-into-spring-2026)[  **Are Sellers Still Getting Multiple Offers in the Washoe County Spring Real Estate Market?**](https://www.bsmithgroup.com/blog/2026/1/23/are-sellers-still-getting-multiple-offers-in-the-washoe-county-spring-real-estate-market)[  **How Competitive Is the Reno–Sparks Housing Market for Buyers in Early Spring 2026?**](https://www.bsmithgroup.com/blog/2026/1/20/how-competitive-is-the-renosparks-housing-market-for-buyers-in-early-spring-2026)[  **7 Simple But Effective Habits For A Cleaner and Tidier Home All Year**](https://www.bsmithgroup.com/blog/2026/1/20/simple-but-effective-habits-for-a-cleaner-and-tidier-home-all-year) Edit Lead Form OPEN PAGE Optional custom content for this leadform (unique to this page) Name First Name(required) Last Name(required) Email(required) Phone(required) By providing your cellular telephone, you are consenting to allow Smith Real Estate Group to contact you with informational communications via voice call, AI voice call, text message, or similar automated means. To opt out, you can reply 'stop' at any time or reply 'help' for assistance. Message and data rates may apply. Message frequency may vary. For more information, see our PRIVACY POLICY For more information see our [Privacy Policy](https://www.bsmithgroup.com/blog/2022/8/3/the-ins-and-outs-of-giving-or-receiving-down-payment-gifts#) SubmitSubmit  We are committed to respecting your right to privacy and protecting your information when you use our services. This privacy policy also describes the choices available to you regarding our use of your personal information and how you can access, update and delete this information. We want you to understand what information we gather about you, how we use it and the safeguards we have in place to protect it. This Privacy Policy applies to information collected through this website and otherwise. Your use of this website and our services, and any disputes arising from it, is subject to this Privacy Policy as well as the Terms of Use and all its dispute resolution provisions, including arbitration, limitation on damages and choice of law. This website is a general audience site and we do not knowingly collect personal information from children under the age of 13. If you have questions or concerns regarding this policy, you should first contact our website at [[email protected]](mailto:[email protected]) 1. Collection and Use of Your Personal Information We collect Personal Information from you only when you voluntarily submit it in order to obtain certain information, including without limitation (A) requests to find out more about our programs; (B) requests to contact us; and (C) requests to forward your information to one of our affiliates. We do not honor all “do not track” requests and settings. If you use any signal(s) or another mechanism(s) that provides you the ability to exercise choice regarding the collection of personally identifiable information about your online activities over time and across third-party websites or online services, we will attempt to override such signals or mechanisms. When you use our website, no other parties can collect personally identifiable information about your online activities over time and across different websites. Your choice is indicated by your settings in your web browser. A “do not track” indication sent from your web browser will not result in any tracking activity (i.e., tracking cookies) within the website to be programmatically disabled. We collect the following personal information from you: - Contact Information such as name, email address, mailing address, and phone number We use this information to: - Send you requested product or service information
- Respond to customer service requests
- Administer your account
- Send you a newsletter
- Send you marketing communications
- Improve our Web site and marketing efforts
- Conduct research and analysis
- Display content based upon your interests Data will not be sold or shared with third parties for promotional or marketing purposes. Information collected may be used to help train AI models and approve our offerings. By clicking the Submit button, you agree to have your information shared with us and for us to initiate contact with you at the telephone number you provided using live, recorded, artificial, or AI-generated voice, mobile phone (including through automated dialing, text SMS/MMS, or pre-recorded messaging) and/or email, even if your telephone number is on a corporate, state, or the National Do Not Call Registry, and you agree to our Privacy Policy. You further represent that you have the authority to provide this consent regarding voice and text calls to the telephone number you provided. To opt out of voice call, tell the operator you no longer wish to receive voice calls. To opt out of text calls, reply “Stop”. For text messaging, you agree to only use the term “Stop” to communicate an opt out. The rights of Users We adopt this Notice to comply with the California Consumer Privacy Act of 2018 (CCPA). Any terms defined in the CCPA have the same meaning when used in this Notice. Users may exercise certain rights regarding their Data processed by the Owner. In particular, Users have the right to do the following: - **Withdraw their consent at any time.** Users have the right to withdraw consent where they have previously given their consent to the processing of their Personal Data.
- **Object to processing of their Data.** Users have the right to object to the processing of their Data if the processing is carried out on a legal basis other than consent. Further details are provided in the dedicated section below.
- **Access their Data.** Users have the right to learn if Data is being processed by the Owner, obtain disclosure regarding certain aspects of the processing and obtain a copy of the Data undergoing processing.
- **Verify and seek rectification.** Users have the right to verify the accuracy of their Data and ask for it to be updated or corrected.
- **Restrict the processing of their Data.** Restrict the processing of their Data. Users have the right, under certain circumstances, to restrict the processing of their Data. In this case, the Owner will not process their Data for any purpose other than storing it.
- **Have their Personal Data deleted or otherwise removed.** Users have the right to obtain the erasure of their Data from the Owner by placing a request at the below designated support email address [[email protected]](mailto:[email protected]) including their Facebook URL, first and last name, email address and/or phone number for identification purposes, or user can also request removal of data from Ylopo by removing the "Local Home Search" app connected to the Facebook account that was used for login. Go to Facebook settings, navigate to "Apps and Websites," and find the app named "Local Home Search". Click "Remove" next to the app's name.
- **Receive their Data and have it transferred to another controller.** Users have the right to receive their Data in a structured, commonly used and machine readable format and, if technically feasible, to have it transmitted to another controller without any hindrance. This provision is applicable provided that the Data is processed by automated means and that the processing is based on the User's consent, on a contract which the User is part of or on pre-contractual obligations thereof.
- **Lodge a complaint.** Users have the right to bring a claim before their competent data protection authority. Details about the right to object to processing Where Personal Data is processed for a public interest, in the exercise of an official authority vested in the Owner or for the purposes of the legitimate interests pursued by the Owner, Users may object to such processing by providing a ground related to their particular situation to justify the objection. Users must know that, however, should their Personal Data be processed for direct marketing purposes, they can object to that processing at any time without providing any justification. To learn, whether the Owner is processing Personal Data for direct marketing purposes, Users may refer to the relevant sections of this document. How to exercise these rights Any requests to exercise User rights can be directed to the Owner through the contact details provided in this document. These requests can be exercised free of charge and will be addressed by the Owner as early as possible and always within one month. We may provide this information in a standardized format that is not specific to you. The designated email address for these requests is [[email protected]](mailto:[email protected]) Consent to Receiving Emails, Auto-Dialing & Auto-Texting: By registering, you are giving us, and our professional real estate clients and advertisers permission to contact you via text message, email, or telephone using the email address and/or telephone number that you have provided during the registration process. Such contact may, from time to time, include attempts to contact you via auto-dialing, prerecorded or artificial voice, or auto-texting technology. You may opt out of receiving these forms of communication by unsubscribing from any email communication or texting STOP as a reply to one of our text communications. There is no fee charged by us or its advertisers to receive text messages, however, your mobile service provider may charge you for sending and/or receiving text messages and air-time, as well as any other standard applicable rates charged by your mobile service provider. Information Sharing We may share your personal information with and any other business associated with this site, in the ways that are described in this Privacy Statement. We may provide your personal information to our subcontractors in support of our services, such as customer service. These companies are authorized to use your personal information as is necessary to provide these services to you. We may also disclose your personal information: - As required by law such as to comply with a subpoena, or similar legal process.
- When we believe in good faith that disclosure is necessary to protect our rights, protect your safety or the safety of others, investigate fraud or respond to a government request,
- To any other third party with your prior consent to do so. Cookies and Other Tracking Technologies We may use cookies, for example, to keep track of your preferences and profile information. Cookies are also used to collect general usage and volume statistical information that does not include personal information. We may use another company to place cookies on your computer to collect non-personally identifiable information to compile aggregated statistics for us about visitors to our site. Links to Other Web Sites Our Site includes links to other Websites whose privacy practices may differ from ours. If you submit personal information to any of those sites, your information is governed by their privacy policy statements. We encourage you to carefully read the privacy statement of any Web site you visit. Security The security of your personal information is important to us. We follow generally accepted industry standards to protect the personal information submitted to us, both during transmission and once we receive it. No method of transmission over the internet, or method of electronic storage is 100% secure, however. Therefore, we cannot guarantee its absolute security. If you have any questions about the security of our Web site, you can contact our website and advertising provider [[email protected]](mailto:[email protected]) Special Notice to California Residents. If you are a resident of California, in addition to the rights set forth in this Privacy Policy: 1. We will not share any personal information about you to the extent prohibited by applicable California law or to the extent your prior consent to share is required by applicable California law; and 2. You have the right to request information from us regarding the manner in which we share certain categories of information with third parties for their direct marketing purposes. California law gives you the right to send us a request at a designated address to receive the following information - the categories of information we disclosed to third parties for their direct marketing purposes during the preceding calendar year
- the names and addresses of the third parties that received that information; and
- if the nature of the third party's business cannot be determined from their name, examples of the products or services marketed. Additional Policy Information Our Web site includes Widgets, which are interactive mini-programs that run on our site to provide specific services from another company (e.g. displaying the news, opinions, music, etc.). Personal information, such as your email address, may be collected through the Widget. Cookies may also be set by the Widget to enable it to function properly. Information collected by this Widget is governed by the privacy policy of the company that created it. Our Web site offers publicly accessible blogs, social media, or community forums such as Facebook, Twitter, or Google Plus. You should be aware that any information you provide in these areas may be read, collected, and used by others who access them. Visiting our Websites From Outside the United States. This Privacy Policy is intended to cover collection of information on our websites from residents of the United States. If you are visiting our websites from outside the United States, please be aware that your information may be transferred to, stored and processed in the United States where our servers are located and our central database is operated. The data protection and other laws of the United States and other countries might not be as comprehensive as those in your country. By using our services, you understand that your information may be transferred to our facilities and those third parties with whom we share it as described in this Privacy Policy. No Rights of Third Parties. This Privacy Policy does not create rights enforceable by third parties or require disclosure of any personal information relating to users of our websites. Notification of Privacy Policy Statement Changes We may update this privacy statement to reflect changes to our information practices or changes in regulations governing privacy. If we make any material changes we will notify you by email (sent to the email address specified in your account) or by means of a notice on this Site prior to the change becoming effective. We encourage you to periodically review this page for the latest information on our privacy practices. This Privacy Policy was last revised on June 2, 2025. We reserve the right to modify or amend this policy at any time by posting the revised Privacy Policy on the website. Loading ADA Widget... reCAPTCHA BESbswy BESbswy
