Quick answer
A gift letter is a signed statement from someone giving you money toward a home purchase, confirming the amount and that you don’t have to repay it. Lenders require it so the money is treated as your own funds, not as a hidden loan that would count against your debt-to-income ratio.
Key facts
5%
Own funds required first, 2–4 units or second home above 80% LTV
Fannie Mae Selling Guide B3-4.3-04 · Feb 4, 2026
What the letter must include
For a Fannie Mae loan, the donor signs a letter that:
- states the actual or maximum dollar amount of the gift;
- says no repayment is expected;
- gives the donor’s name, address, phone number and relationship to you.
The lender also documents the transfer, for example with a copy of the donor’s check and your deposit slip, a wire record, or the donor’s check to the closing agent. Acceptable donors include relatives, a domestic partner, a fiancé or fiancée, and people with a long-standing family-like relationship to you. No one with a stake in the sale, such as the builder or a real estate agent, can be a donor.
How much a gift can cover
On a one-unit home you’ll live in, a gift can cover the whole down payment, closing costs and reserves. On a two- to four-unit home or a second home with more than 80% LTV, you must first put in 5% from your own funds, and gifts aren’t allowed on investment property. On taxes, the donor, not you, files a gift tax return only when gifts to one person top $19,000 in a year, and tax is generally owed only after their lifetime exemption is used up. More in the down payment guide.
Sources
- Fannie Mae Selling Guide B3-4.3-04 — Fannie Mae: own funds required above 80% LTV on a two- to four-unit principal residence or second home (Feb 4, 2026)
- IRS: What's new — Estate and gift tax — Annual gift tax exclusion per recipient (2026) (Tax year 2026)
- CFPB: Where can I get money for a down payment on a home?
Last reviewed Figures are checked against the sources above. Read our editorial policy. This page is general information, not financial advice — see the disclaimer.