Is there a minimum amount of money someone else can contribute to help me with my down payment?

Many borrowers find it challenging to cover the full down payment and closing costs on their own. Fortunately, most mortgage products allow for monetary gifts from approved sources to help with these expenses. However, it’s essential to understand the specific guidelines and requirements associated with each mortgage type, especially the FHA gift funds limit.

• Fannie Mae (Conventional): Allows gift funds to cover all or part of the down payment, closing costs or financial reserves. However, the borrower must make a minimum contribution of 5% from their own funds before gift funds can be applied. ​

• Freddie Mac: Requires the borrower to contribute at least 5% of their own funds to the down payment before accepting a monetary gift. If the loan-to-value (LTV) ratio is 80% or lower, the borrower may not need to contribute any of their own funds.

• FHA: FHA loans permit the use of gift funds for all or part of the down payment, closing costs or financial reserves. There is no limit on the amount that can be gifted, and the entire down payment can come from gift funds.

• USDA: While USDA loans do not require a down payment, gift funds can be used to cover all or part of the down payment if the borrower chooses to make one. Gift funds can also be applied toward closing costs. Acceptable sources of gift funds include family members, employers or labor unions, charitable organizations and homeownership assistance programs.

• VA: VA loans do not require a down payment. However, gift funds can be used for the down payment if the borrower chooses to make one. Gift funds can also be applied toward closing costs. Acceptable sources include family members, employers or charitable organizations. It’s important to note that the donor must provide a gift letter stating that the funds are a gift and do not require repayment.

If you’re thinking about using gift funds for your down payment or have more questions about how it works with your mortgage, our team is here to help. Get in touch with us today.