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Can't cover the down payment alone? FHA lets every dollar of it be a gift. Here is your yes.
3.5% down - and 100% of it can come from family, your employer, or a down payment assistance program. Add up to 6% of seller help on closing costs, and "I can't afford to buy" often turns out to mean "nobody showed me the rules."
Rules below come from HUD Handbook 4000.1, in plain English. Subject to eligibility and lender guidelines.
"Come back when you've saved a real down payment."
The 3.5% has four legal sources:
- A documented gift from family - up to all of it
- Down payment assistance programs
- An employer or approved organization
- Your own savings, in any mix with the above
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Who may give, and who may not
FHA's minimum investment is 3.5% of the purchase price, and HUD explicitly allows every dollar of it to be gifted. Acceptable donors: a family member (the broad HUD definition - parents, siblings, grandparents, in-laws, and more), your employer or labor union, a close friend with a clearly defined and documented relationship, a charitable organization, or a government homebuyer-assistance program.
The bright line is interest in the deal. The seller, the agent, the builder, the lender - anyone who profits from the sale - cannot gift your down payment. (Sellers get their own lane: they can pay up to 6% of the price toward your closing costs, points, and even the upfront mortgage insurance - just never the 3.5% itself.)
And one rule inside the rule: the money must genuinely be a gift from the donor's own funds. No repayment expected - stated in writing - and no donor running a payday loan or cash advance to fund it. Underwriters check the source, which is exactly why the paper trail below matters.
Gift funds done right, in four steps
Gift money never sinks a file for existing - it sinks files for arriving undocumented. Follow the trail rules and this is routine:
Confirm the donor and size the gift
Check the donor against the acceptable list, then get real about the number: 3.5% of price for the down payment, and remember closing costs ride on top (that is where seller concessions and lender credits come in).
The move
On a $250,000 home: $8,750 of down payment, all giftable. Have the full cash-to-close mapped by a lender before the donor commits, so nobody is surprised in week five.
Timeline: one planning callWrite the gift letter properly
The letter is short and standardized: donor's name, address, phone, their relationship to you, the exact dollar amount, and the sentence that makes it a gift - no repayment is required or expected. Both parties sign.
The move
Use the lender's template rather than freelancing one. A missing phone number or an amount that does not match the wire is the kind of trivial mismatch that stalls closings.
Timeline: 10 minutes with the right formMove the money so it can be traced
The underwriter must see the gift leave the donor's account and arrive in yours - or go straight to the closing table by wire. Bank transfer with statements on both ends is the gold standard. A shoebox of cash, however real the love behind it, cannot be sourced.
The move
Transfer early - ideally before the loan file is submitted - and save the donor's statement showing the withdrawal plus yours showing the deposit. Wiring at closing works too and keeps the donor's statements more private.
Timeline: transfer 2+ weeks before closing for smooth sailingStack the other helpers
Gifts are one lane of a wider road. State and local down payment assistance programs layer on top of FHA. A family member selling you their home can gift equity instead of cash. And negotiated seller concessions can carry most or all of the closing costs.
The move
Ask what DPA programs your state offers before assuming you need the full gift - the stack often shrinks the family's share to something painless, subject to eligibility and program funding.
Timeline: program lookup in one callOne nuance if your file is a manual underwrite: the gift can fund your down payment - but the savings cushion an underwriter wants to see beyond it, about 2x the new payment, must be money YOU saved, not gifted. It is one of the 5 things in the manual underwriting playbook. Keep the gift and your own savings in distinct, documented lanes.
Related pages
Non-occupant co-borrower
When the gap is income rather than cash, family can join the loan itself without moving in - and 3.5% down survives.
See the rules →FHA requirements (2026)
Scores, down payment, DTI, MIP, and loan limits - the whole rulebook in plain English.
See the rules →Every FHA denial reason
The complete diagnosis index - find any reason you were given and the exact path back to yes.
See all reasons →What buyers ask about down payment help
Can my whole FHA down payment really be a gift?
Yes - HUD allows 100% of the 3.5% minimum investment to come from gift funds, from an acceptable donor, with a signed gift letter and a documented transfer. Thousands of FHA purchases close this way every month.
Does the gift have to come from a blood relative?
No. HUD's family definition is broad - including in-laws and step-relations - and beyond family, an employer, labor union, charitable organization, government assistance program, or even a close friend with a clearly defined, documented relationship can give. The only hard exclusions are parties with an interest in the sale: seller, agent, builder, lender.
Will the gift cause tax problems for me or the donor?
Receiving a gift is not taxable income to you. Donors have annual IRS gift-exclusion limits before any reporting is required - most down payment gifts fit under them, and larger ones usually just require a form, not a tax bill. For amounts near the limits, have the donor check with a tax professional; that is their side of the paperwork, not the mortgage's.
Can the seller just cover my down payment?
No - anyone with an interest in the transaction is barred from gifting the down payment. What sellers CAN do is pay up to 6% of the purchase price toward your closing costs, prepaid items, points, and upfront mortgage insurance. Structured well, seller help plus a family gift can shrink your cash to close dramatically.
Why does the lender want my donor's bank statement?
Sourcing. The underwriter must confirm the gift is the donor's own money - not a loan in disguise, not a payday advance, not the seller routing cash through a cousin. One statement showing the withdrawal usually settles it. Donors who value privacy can wire directly to the closing agent instead, which keeps their broader finances out of the file.
Let's map your real cash-to-close.
One call: we price the down payment, hunt the DPA programs you qualify for, structure any family gift correctly, and hand you the exact number - often smaller than the one that scared you.
Or call (843) 569-7283 / 843.LOW.RATE