Gift Funds for a Down Payment in San Diego: Who Can Give and What Lenders Require

A relative can often give you money for a down payment, as long as the gift is documented and does not have to be repaid. At the time this article was written, Fannie Mae's guide allowed gifts to fund all or part of the down payment, closing costs or reserves on many purchases, and required a signed gift letter from the donor.

Who can give a gift

Fannie Mae's Selling Guide lists these acceptable donors:

• A relative: a spouse, child or other dependent, or anyone related by blood, marriage, adoption or legal guardianship.
• A non-relative with a family-like tie: a domestic partner or their relative, someone engaged to marry the borrower, a former relative, or a person with a long-standing family-like or mentorship relationship.
• A seller, if the seller is not affiliated with any other interested party.

The guide says a donor may not be, or be affiliated with, the builder, developer, real estate agent or any other interested party in the sale. That is a rule I take seriously, since it protects you from a deal that unravels at underwriting.

Does the borrower have to contribute too?

It depends on the down payment and the property. At the time this article was written, the guide showed this:

Loan to value	Property	Own funds required
80% or less	1 to 4 unit primary home, or second home	None. All funds may come from a gift.
Over 80%	1 unit primary home	None. All funds may come from a gift.
Over 80%	2 to 4 unit primary home, or second home	5% from your own funds. Gifts can cover the rest.

Gifts are not allowed on investment properties, and special programs such as HomeReady have their own rules. Because the answer changes with the loan, confirm it with your lender. My guide to how much down payment you need explains the basics.

What the gift letter must include

• The donor's signature.
• The actual or maximum dollar amount.
• A statement that no repayment is expected.
• The donor's name, address, telephone number and relationship to you.
• If the money comes from a trust or estate, the name of that account.

Proof that the money moved

The lender will want evidence of the transfer. The guide lists acceptable examples:

• The donor's check and your deposit slip.
• The donor's withdrawal slip and your deposit slip.
• Proof of an electronic transfer to your account or to the closing agent.
• The donor's check to the closing agent.
• A settlement statement showing the donor's check was received.

If the money is not moved before closing, the lender must document that the donor gave the funds to the closing agent by wire, certified check, cashier's check or another official check. Tell the donor early, because moving money at the last minute is a common cause of delays. My closing costs guide shows what else needs to be paid.

Tips for buyers and families

1. Ask your lender for its gift letter form and exact documentation list.
2. Have the donor send the money straight to you or the closing agent, and keep the receipt.
3. Do not mix the gift with other deposits that you cannot explain. Lenders review your bank statements.
4. Keep the amount in your lender's file the same as the amount actually given. If it changes, tell the lender.
5. See my guide to debt-to-income ratio, because a gift does not change your monthly debts.

Questions about gift taxes belong with a CPA. I am a REALTOR, and I can explain the home buying side of the process only.

What this guide cannot promise

These rules come from one major loan buyer and apply to loans it purchases. Other loan types and lenders may add or change requirements. Your lender will tell you what it needs before you rely on a gift.

My advice for San Diego buyers

1. Ask your lender about gift rules before the donor moves any money.
2. Make sure the gift letter is signed and complete.
3. Move the money in a way you can document.
4. Keep copies of every transfer and bank statement.
5. Ask a CPA about any tax questions for the donor.

A note on advice

I am a REALTOR®, not a lender, attorney, tax professional or financial advisor, so this guide is general information. Your lender can tell you what you qualify for, and a CPA or attorney can answer tax and legal questions.

Related guides

• Debt-to-Income Ratio Explained: What Lenders Look at When You Buy in San Diego
• Buying a Home in San Diego With a Low Credit Score: What Your Options Are
• Self-Employed Home Buyer Guide for San Diego: How Lenders Verify Your Income
• Buying a Home in San Diego With Student Loan Debt: How Lenders Count It
• How Much Down Payment Do You Need to Buy a Home in San Diego?
• How Much Are Closing Costs When Buying a Home in San Diego?

Frequently asked questions

Can I use gift money for a down payment?

Often yes. At the time this article was written, Fannie Mae's guide allowed gifts for the down payment, closing costs or reserves, subject to minimum contribution rules.

Who can give me a gift?

Relatives, a domestic partner, a fiancé or fiancée, and people with a long-standing family-like relationship are acceptable donors. A builder, developer or real estate agent is not.

What does a gift letter say?

It is signed by the donor and states the amount, says no repayment is expected and lists the donor's name, address, phone number and relationship to you.

Do I need to put in some of my own money?

It depends on the loan to value ratio and property type. For many one-unit primary homes, all funds may come from a gift. For two to four units, 5% may need to be your own.

How does the lender verify the gift?

With records such as the donor's check and your deposit slip, an electronic transfer record or a settlement statement showing the donor's check.

About the author

Trevor Landress is a San Diego REALTOR® with Coldwell Banker West (DRE# 02126901). He was born and raised in San Diego and has been licensed since 2021.

Trevor helps homeowners sell, guides first-time buyers through the home buying process and assists investors with their next acquisition. His work includes negotiating offers, analyzing market trends, building pricing strategies and running marketing campaigns for his listings.

He serves clients across San Diego County, from coastal communities like La Jolla, Del Mar and Carlsbad to neighborhoods inland.

Trevor is part of the Campbell Group, a three-generation real estate team, and he and the Campbell Group consistently rank as a top producing team at Coldwell Banker West each month. He writes these guides to help San Diego buyers and sellers navigate an ever-changing market. To talk through your plans, call or text (619) 402-4614 or contact Trevor Landress.

How I help San Diego home buyers

I help buyers sort out their budget, understand their loan options with a lender, search for homes, write and negotiate offers, keep track of inspection and contingency deadlines and stay organized through closing.

How I help San Diego home sellers

I help sellers price their home, prepare it for the market, market it to buyers, review and negotiate offers and manage the steps from an accepted offer to closing.

Rules and official pages

• Fannie Mae Selling Guide: Personal gifts