Can I use gift funds for a conventional down payment?
Yes. Conventional allows gift funds from eligible donors (family member, fiancé, domestic partner) for the entire down payment on primary residences and second homes. Investment properties have stricter rules. A signed gift letter and source documentation from the donor are required.
What this actually means.
Gift letter must state: relationship between donor and borrower, gift amount, date, and explicit statement that no repayment is expected. Source documentation: copy of donor's bank statement showing the funds, plus the wire/transfer evidence to the borrower's account. On a primary-residence purchase with at least 20% down, the entire down payment can be gifted. Below 20% down on primary, gift funds are still allowed in full on standard conventional. Subject to Fannie/Freddie guidelines.
Where this can move.
Gift source, seller credit limits, DPA program rules, source-of-funds documentation, and program eligibility (HomeReady, Home Possible) can change the answer.
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More conventional questions on Down Payment.
Educational only. Conventional loan guidelines, lender overlays, rates, fees, PMI, LLPAs, and underwriting requirements can change. Final eligibility depends on full underwriting review. Mortgage Expert, Inc. is not affiliated with Fannie Mae, Freddie Mac, FHFA, or any government agency.