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Down Payment Gift Guide


Be it the holiday season or not, many buyers need a gift to get into their first home.

Can a buyer receive money from a family member for a down payment on a home?

The short answer is yes, as long as it’s a gift.

Until recently, some loan programs require at least 5% of the down payment to come from the buyer’s own funds before they could accept gifted funds. Fortunately, this rule has been relaxed so buyers now can use gift funds exclusively for the down payment.

Quick Rules of Thumb for Gift Down Payment

– Must be transferred without expectation of repayment. No personal loans allowed.
– Must be made by a relative or domestic partner
– Must provide documents to verify gift legitimacy
– Must be received from an account owned by the gift donor

How does the IRS view these gifts?

The IRS allows relatives to gift funds to a family member up to a specified annual limit. Currently, that limit is set at $14,000 per recipient. For example; if a parent wants to gift a son and daughter-in-law money for a down payment, that parent would be able to gift both the son and the daughter-in-law $14,000 tax-free for a total of $28,000. It is important that you check with your tax professional to confirm how the donation of a gift might affect you.

TanaArticle By: Tana Hubbard
Evolve Bank & Trust
NMLS# 195097

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