Purchase · 4 min read
Can I use gift funds for a down payment?
July 7, 2026 · Written by Bill Egan, NMLS 7342
Short answer
Yes, on most purchase programs, if the gift comes from someone the program allows and we can show the money left their account and landed in yours. Earnest money, down payment, and closing costs can often be gifted. A loan that is dressed up as a gift is not a gift.
01
Why this comes up
Parents offered the down payment, the wire is about to go out, and you are afraid a “gift” will stall the loan or get treated like a secret second mortgage.
02
Where this goes wrong
The wire lands as a large cash deposit with no trail. Underwriting suspends for source of funds. The donor is not an allowed source for that program, or they will also be on title and nobody said so. Closing waits on a paper trail that should have existed before the money moved.
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What we do about it
We document the trail: who is allowed to give, that the money left their account, and that it landed in yours. We tell you the conventional, FHA, and VA source rules before the wire, not after a large unexplained deposit shows up.
04
How to get ready
Do not send cash in an envelope. Get a gift letter and statements that show the money leave the donor. Tell us if the donor will also be on the title — that is a different file. Conventional usually means a relative. Ask before anyone hits send.