Last updated: October 24, 2026
Short answer: Yes. FHA and conventional loans allow gifts from family for your down payment and closing costs, and on a one-unit home you'll live in, the whole down payment can be a gift. You'll need a signed gift letter and a paper trail. The 2026 IRS annual exclusion is $19,000 per person. Browse our Avondale home search.
Key takeaways
- Fannie Mae: on a one-unit home you'll live in, all the funds you need can come from a gift. Gifts aren't allowed on investment properties.
- FHA: gifts can come from family, your employer or labor union, a close friend with a documented interest, a charity or a government program, but not from the seller, the builder or the agents.
- Both require a gift letter that shows the amount and says no repayment is expected, plus proof of how the money moved.
- IRS: the 2026 annual exclusion is $19,000 per person. The giver, not you, generally handles any gift tax.
¡Qué tal! I'm Rosie Armenta. For a lot of parents and grandparents, helping a son, daughter or grandchild buy a first home is a blessing they're proud to give. Lenders are fine with that, as long as the gift is documented the right way. When it isn't, the money can get stuck in underwriting right before closing. Here's what Mariela and I want every buyer and every generous family member to know before the money moves.
Can I use gift money for a down payment in Arizona?
Yes. Arizona follows the same national loan rules as every other state, so what matters is your loan type. FHA and conventional loans both allow gifts for the down payment and closing costs. Other loan types, like VA, have their own rules, and your lender will confirm what applies.
If you're still figuring out how much you need, my guides to how much down payment you really need in Arizona and what closing costs to expect walk through the numbers.
Who can give me money for a down payment?
| FHA | Conventional (Fannie Mae) | |
|---|---|---|
| Who can give | A family member; your employer or labor union; a close friend with a clearly defined and documented interest in you; a charity; or a government agency with a homebuyer program | A relative by blood, marriage, adoption or legal guardianship, or someone with a family-like relationship, such as a domestic partner, a fiancé or fiancée, or a long-time mentor |
| Who can't give | The seller, or anyone else who benefits from the sale, toward your minimum required investment | The builder, developer, real estate agent or any other interested party |
| How much can be a gift | Your minimum required investment can be a gift from an acceptable source | On a one-unit home you'll live in, all of it. On a 2- to 4-unit home or a second home, you may need to put in some of your own money first |
| Gift of equity | Only from a family member selling you their home | Allowed on a home you'll live in or a second home, but not for reserves |
| Gift letter | Signed and dated by the donor and you | Signed by the donor |
Sources: HUD Handbook 4000.1, II.A.4.d.iii(J) and II.A.5.c.iii(F), Gifts (Personal and Equity), current version at hud.gov, checked October 24, 2026; Fannie Mae Selling Guide B3-4.3-04 and B3-4.3-05, checked October 24, 2026.
What does a gift letter need to say?
Your lender will usually give you its own form. Under HUD's FHA rules, the letter is signed and dated by the donor and by you, and includes:
- The donor's name, address and phone number
- The donor's relationship to you
- The dollar amount of the gift
- A statement that no repayment is required
Fannie Mae asks for the same basics: the actual or maximum dollar amount, the donor's statement that no repayment is expected, and the donor's name, address, phone number and relationship to you.
How should the gift money be transferred?
Make it easy for the underwriter to follow the money. Both FHA and Fannie Mae accept proof like a copy of the donor's check with your deposit slip, a withdrawal slip with your deposit, an electronic transfer from the donor's account, or a check or wire straight to escrow. HUD says cash on hand isn't an acceptable source for the donor's gift, so a stack of cash from under the mattress won't work.
Fannie Mae also has the lender look into any single deposit that's more than half of your total monthly qualifying income. A clear gift letter and transfer record answer that question before it's asked.
How do I use gift money for my down payment?
- Tell your lender early. Say a gift is part of your plan when you apply, and ask which loan rules apply.
- Get the lender's gift letter. Have the donor fill it out with the exact or maximum amount.
- Move the money the traceable way. Use a check, bank transfer or wire, never cash.
- Keep the paper trail. Save the donor's statement or check copy and your deposit record.
- Send everything to your lender. Turn in the letter and transfer proof well before closing.
- Talk to a CPA if the gift is large. The giver may need to file a gift tax return.
Will my parents owe gift tax?
Usually not. The IRS annual exclusion for 2026 is $19,000 per recipient, and each spouse gets their own exclusion. A gift above that amount generally means the giver reports it on Form 709, but tax is only owed after the giver uses up a lifetime exclusion, which is $15,000,000 for 2026. The IRS says the donor is generally responsible for paying any gift tax, not the person receiving it.
Here's how the IRS rules work on two example gift amounts:
| A $14,700 gift | A $21,000 gift | |
|---|---|---|
| One parent gives it all | Under $19,000, so no gift tax return for this gift alone | Over $19,000, so the parent generally files Form 709, but owes tax only after using up the lifetime exclusion |
| Two parents split it | $7,350 each | $10,500 each, under each parent's $19,000 exclusion |
Gift tax figures: IRS, 2026. This example is for illustration only.
Ready to start your search?
Browse the Avondale home search, and if you already own a home, get a free home value report. Before you make an offer, talk with a licensed lender of your choice about what documents they need for a gift. Then call or text me at 623-295-5770. Mariela and I will help you find the right home, plan your timing and keep the paperwork moving so closing day is a celebration.
Frequently Asked Questions
Can I use gift money for my whole down payment?
Often, yes. Fannie Mae allows all the funds to come from a gift on a one-unit home you'll live in. FHA allows your minimum required investment to be a gift from an acceptable source, like a family member. Second homes and 2- to 4-unit homes may need some of your own money.
Who can give me a gift for a down payment?
For FHA, a family member, your employer or labor union, a close friend with a documented interest in you, a charity or a government homebuyer program. For conventional loans, a relative or someone with a family-like relationship. The seller, builder and agents generally can't.
What is a gift letter for a mortgage?
It's a signed letter from the person giving you the money. It lists the amount, says no repayment is expected, and gives the donor's name, address, phone number and relationship to you. For FHA, you sign and date it too.
Can a friend give me money for a down payment?
For FHA, a close friend with a clearly defined and documented interest in you can. For conventional loans, Fannie Mae allows someone with a long-standing family-like or mentorship relationship. Your lender decides what documentation is enough.
How much money can my parents give me in 2026 without paying gift tax?
Each parent can give up to $19,000 to each person in 2026 under the IRS annual exclusion. Larger gifts generally need a gift tax return, but tax is only owed after the giver uses up a lifetime exclusion of $15,000,000.
Can my parents give me cash for a down payment?
Not as loose cash. HUD says cash on hand isn't an acceptable source of gift funds for FHA. Use a check, bank transfer or wire so the lender can see where the money came from and where it went.
What is a gift of equity?
It's when a family member sells you their home for less than its value and the difference counts as a gift toward your down payment. FHA allows it only between family members. Fannie Mae allows it on a home you'll live in or a second home.
Can I use gift money to buy an investment property?
Not with a conventional Fannie Mae loan. Fannie Mae says gifts are not allowed on investment properties. Ask your lender about other options.
This article is general information, not legal, tax, or financial advice. Please talk with a licensed attorney, CPA, or lender about your situation.
About the authors
Rosie Armenta is a REALTOR® with West USA Realty. She and her daughter, Mariela Armenta, work together as a mother-daughter team. Avondale (85392) is their home base, and they help buyers and sellers across the West Valley in English and Spanish. Call or text 623-295-5770, or get a free home value report.
Rosie Armenta, REALTOR® | West USA Realty | Equal Housing Opportunity
Figures were checked on October 24, 2026, from HUD Handbook 4000.1, the Fannie Mae Selling Guide (B3-4.3-04 Personal Gifts, B3-4.3-05 Gifts of Equity and B3-4.2-02 Depository Accounts), and the IRS gift tax pages. Loan rules change, so your lender confirms what applies to your loan.