Yes, most mortgage programs let buyers use gift money from family or qualified donors toward a down payment — but the rules on who can give, how much you need from your own savings, and the documentation required vary by loan program. For Fairfax homebuyers, understanding these rules before the money moves can mean the difference between a smooth closing and a last-minute scramble to source large deposits.
Gift funds can cover part or all of your down payment, closing costs, and even required financial reserves — depending on the loan program, the property type, and whether the home is your primary residence. The key is knowing which rules apply to your situation before you accept or transfer any money.
Who can give you gift money?
Fannie Mae defines acceptable donors broadly — and the list is wider than most buyers realize. The guidelines allow gifts from relatives (spouse, child, dependent, or anyone related by blood, marriage, adoption, or legal guardianship), plus non-relatives who share a familial-like relationship with the borrower: a domestic partner, a fiancé, a former relative, a godparent, or someone with a long-standing mentorship relationship (Fannie Mae).
What the rules prohibit: anyone with a financial interest in the transaction. The builder, the developer, the real estate agent, and any other interested party cannot provide gift funds. One exception: the seller can be a donor if they are also an acceptable relative and not affiliated with any other interested party.
A friend who is not a relative and has no familial-type relationship? Under standard Fannie Mae guidelines, an unrelated friend does not qualify as an acceptable donor. That said, certain loan programs (FHA, VA, USDA) may have different rules. Always confirm with your loan officer which program applies.
What documentation do you need for a gift?
Every gift requires a signed gift letter from the donor — and that letter is just the starting point. The Fannie Mae Selling Guide specifies that the gift letter must state the exact dollar amount (or maximum amount), the donor's name, address, phone number, and relationship to the borrower, and must include a statement that no repayment is expected (Fannie Mae).
The lender must also verify that the donor actually had the funds. Acceptable proof includes:
The donor's bank or investment account statement showing sufficient funds
Evidence of an electronic transfer from the donor's account to the borrower's account
A copy of the donor's check and the borrower's deposit slip
A settlement statement showing the donor's check was received at closing
If the gift is not transferred before closing, the lender must document that the donor gave the closing agent the funds via electronic transfer, certified check, cashier's check, or other official check. Cash is not acceptable.
A special rule applies when the donor has lived with the borrower for the past 12 months and will continue living in the new home: the gift is treated as the borrower's own funds and can satisfy the minimum borrower contribution requirement, even on loans that normally require 5% from personal funds. The donor must certify in writing that they have shared the residence and will continue to do so.
Can your parents give you the entire down payment?
Possibly yes — under certain mortgage programs, the entire down payment can come from an acceptable donor. Under Fannie Mae's current guidelines, a borrower buying a one-unit principal residence can receive gift funds covering 100% of the down payment, closing costs, and reserves, regardless of the loan-to-value ratio. For a two- to four-unit primary residence or a second home with more than 80% LTV, the borrower must contribute at least 5% of the purchase price from their own funds, and gifts can cover the rest (Fannie Mae).
The loan-to-value ratio — the mortgage amount divided by the property's appraised value — is the key factor. At 80% LTV or below on any primary residence or second home, no minimum borrower contribution is required at all. Above 80% LTV on a single-unit primary residence, the same rule applies: a gift can cover everything. The 5% minimum only kicks in for higher-risk scenarios.
Important: Fannie Mae does not allow personal gift funds on investment properties. If you are buying a rental property in Fairfax, expect to use your own funds for the entire down payment.
Does gift money have to be in your account before you apply?
Not necessarily — depending on the mortgage program, the gift can be transferred during the loan process or sent directly to the settlement company. The Consumer Financial Protection Bureau advises that lenders need to verify the source of down payment funds and may request documentation for large deposits (CFPB).
Many buyers assume they should deposit the money immediately. In practice, the safest approach is to ask your loan officer for transfer instructions before any money moves. If you deposit a large sum without advance notice, the underwriter will need to source that deposit anyway — and an undocumented deposit creates extra work and potential delays.
Key point: A large deposit showing up in your account without a paper trail is one of the most common underwriting snags. Coordinate with your lender first, and the process is smoother.
Can you use gift funds for an investment property?
No — under current Fannie Mae guidelines, personal gift funds are not allowed on investment properties. The rule is clear: "Gifts are not allowed on an investment property" (Fannie Mae). If you are buying a rental property in Fairfax, you must use your own funds for the down payment, closing costs, and reserves.
This restriction applies to conventional Fannie Mae loans. Other loan programs (portfolio loans, non-QM products) may have different rules, but they typically also require the borrower to have skin in the game on investment properties. The logic: Fannie Mae expects investment property buyers to have their own capital at risk, since the loan carries higher default risk.
For second homes, gift funds are allowed but subject to the minimum borrower contribution requirements. Above 80% LTV on a second home, the borrower must contribute at least 5% from their own funds before gifts can be applied.
What about Virginia Housing down payment assistance?
Virginia Housing offers down payment assistance programs that Fairfax buyers can use alongside or instead of personal gifts. The Virginia Housing Down Payment Assistance Grant provides up to 2% of the purchase price as a true grant — no repayment required — when paired with a Virginia Housing first mortgage. The eligibility requirements include income limits by county, a minimum credit score (generally 620 or higher), and completion of a homebuyer education course (Virginia Housing).
Virginia Housing also offers the Plus Second Mortgage, which provides 3% to 5% of the purchase price as a forgivable second mortgage. This option has higher income limits than the grant program and is available to both first-time and repeat buyers.
Key difference between gifts and DPA: A personal gift comes from an individual donor. Down payment assistance comes from a government agency, nonprofit, or employer. Both can reduce your out-of-pocket costs, but they have different rules, income limits, and documentation requirements. You can often layer them — for example, a Virginia Housing grant plus a family gift — but your loan officer needs to structure the combination correctly.
For Fairfax buyers specifically, county-level programs may also be available. Fairfax County's FTHB program offers below-market purchase options, and local programs like Loudoun County's DPCC (up to $70,000) and Arlington's MIPAP (up to $112,500) serve neighboring jurisdictions.
When to talk to a loan officer before moving the money
The single most important step in the gift process happens before any money changes hands. A conversation with a loan officer can clarify:
Whether the donor is acceptable under your selected program
How much may be gifted
Where the money should be sent (your account vs. the settlement company)
What documents will be needed
Whether the gift affects required reserves
Whether another assistance option should be considered
Every Fairfax buyer's situation is different. The mortgage program, the property type, the occupancy, the loan-to-value ratio, and the donor's relationship all affect how gift funds are handled. A 20-minute conversation early in the process can prevent weeks of underwriting delays.
Does a gift have to be repaid?
No — a true gift cannot include an expectation of repayment. If the person providing the funds expects to be repaid, the money is treated as borrowed funds, not a gift. That distinction matters because borrowed funds create an additional debt obligation that must be factored into your debt-to-income ratio during underwriting.
If repayment is part of the arrangement, disclose it to your loan officer upfront. An undisclosed repayment agreement can create underwriting, compliance, and potential fraud concerns. The safest approach is to structure any arrangement that requires repayment as a formal loan — and understand that it will affect your ability to qualify.
Bottom line: If it walks like a loan and quacks like a loan, your lender will treat it like one. Gift funds are for gifts only.
