Fannie Mae revised its personal gift policy on February 4, 2026, and the acceptable donor definition now reaches past the immediate family wording most gift letter pages still repeat. Federal Housing Administration (FHA) loans run on a separate donor list maintained by the U.S. Department of Housing and Urban Development (HUD), and Department of Veterans Affairs (VA) guidance leaves more of the documentation to individual lenders. The program on your file decides who may hand you money and what has to be proven about it.
A Gift Is Money With No Repayment Attached
The HUD handbook governing FHA lending describes a gift as a contribution of cash or equity with no expectation of repayment. Fannie Mae takes the same position for conventional financing and requires the donor to put it in writing. If repayment is expected, even casually between family members, the money stops being a gift and starts looking like an undisclosed debt, which changes your debt-to-income ratio (DTI).
Traceability carries similar weight. Money that cannot be tied back to an account, such as cash kept at home, is difficult to document and may not be usable at all. Fannie Mae also limits where a gift can be applied, permitting one on a loan secured by a principal residence or a second home but not on an investment property.
Who Can Give the Money Depends on Your Loan Program
Donor eligibility is where the programs diverge most, and a rule you read about one program does not carry over to another.
| Loan program | Donors the program allows | Source |
|---|---|---|
| Conventional (Fannie Mae) | A relative, meaning a spouse, child, or other dependent, or someone related by blood, marriage, adoption, or legal guardianship. Also a non-relative who shares a familial relationship as the guide defines it | Selling Guide B3-4.3-04 |
| FHA | A family member, the borrower's employer or labor union, a close friend with a clearly defined and documented interest in the borrower, a charitable organization, or a government agency or public entity running a homeownership assistance program | HUD Handbook 4000.1, Part II |
| VA | A donor with no affiliation to the builder, developer, real estate agent, or any other interested party to the transaction | VA Lenders Handbook, Pamphlet 26-7 |
The interested party restriction is the common thread: the person handing you money generally cannot hold a financial stake in the sale. Fannie Mae allows a narrow exception for a seller who independently meets its donor definition.
Fannie Mae Widened Its Donor Definition in February 2026
The February 4, 2026 update to B3-4.3-04 came through Announcement SEL-2026-01. The non-relative donor category now covers a domestic partner or a relative of that domestic partner, an individual engaged to marry the borrower, a former relative, and an individual with a long-standing familial-like or mentorship relationship.
A longtime mentor or a former in-law is worth raising with a loan officer rather than assuming the answer is no. Qualification is an underwriting determination made on your file, and lenders can apply requirements beyond the published minimums.
Minimum Contribution Rules Turn on Property Type
Fannie Mae organizes its minimum borrower contribution table by loan-to-value ratio (LTV) and property type. At 80 percent LTV or less on a one- to four-unit principal residence or a second home, no contribution from your own funds is required. Above 80 percent, a one-unit principal residence also carries no minimum, meaning the funds needed to complete the transaction can come from a gift. Above 80 percent on a two- to four-unit principal residence or a second home, the guide requires 5 percent from your own funds before gift money supplements the rest.
A footnote to that table matters for buyers purchasing with someone they already live with. If the donor has lived with you for the past 12 months and both of you will occupy the new home as a principal residence, the gift can count as your own funds toward that minimum, with a donor certification and records showing a shared address.
FHA applies its own minimum required investment rules, with additional source requirements when gift funds satisfy that investment.
The Gift Letter Has to Say Specific Things
Fannie Mae requires a letter signed by the donor that includes:
- The actual or maximum dollar amount of the gift
- A statement from the donor that no repayment is expected
- The donor's name, address, telephone number, and relationship to you
FHA guidance sets a similar list but adds a detail that catches people out: the letter must be signed and dated by the donor and the borrower. A template built for a conventional file is not automatically sufficient on an FHA file, which is why lenders commonly supply their own form.
Documenting the Transfer Is Where Files Slow Down
The letter is only half of it. Programs also want evidence that the donor had the money and that it moved. Fannie Mae's guide lists acceptable documentation including:
- A copy of the donor's check together with your deposit slip
- The donor's withdrawal slip together with your deposit slip
- Evidence of an electronic transfer from the donor's account to yours or to the closing agent
- A copy of the donor's check to the closing agent, or a settlement statement showing receipt
FHA splits the requirement by timing. If the funds are already verified in your account, the lender obtains the donor's bank statement showing the withdrawal plus evidence of the deposit. If they have not landed yet, the lender obtains the official check evidencing payment plus a donor bank statement showing sufficient funds.
VA is looser on paper. The VA's own credit standards guidance notes that the Lenders Handbook does not specify where gift funds must be verified, in the donor's account or the borrower's, so what you are asked to produce depends more on lender procedure than on a published VA rule.
One habit helps on any program: keep the gift as a single traceable transfer. Splitting it across several deposits, or mixing it with other money before it lands, generates more document requests rather than fewer.
What Your Lender Controls and What It Does Not
A lender controls which gift letter form you receive and when the request goes out, and it can tell you in advance what the donor will be asked to produce.
A lender does not control agency guidelines, investor requirements, or how an underwriter reads a relationship against a donor definition. It also cannot make a donor comfortable sharing a bank statement, and donors are often surprised their account records enter the file at all. Raising that early goes better than raising it the week of closing. Two related points belong in the same conversation: some programs and lenders restrict gift funds from counting toward post-closing reserves, and gift tax reporting is a question for a qualified tax professional rather than the loan file.
How Edge Mortgage USA Approaches Gift Funds
Edge Mortgage USA works with conventional, FHA loans, VA loans, and jumbo loans across fixed and adjustable rate structures, so the donor rules that apply follow the program that fits your file. A loan officer can identify the applicable letter format and tell a donor what to expect before any money moves.
Sizing the gift is a separate exercise from sourcing it, and down payment requirements vary enough that the target number shifts once a program is selected. Running that figure through the down payment calculator before a donor commits keeps the amount from being revised mid-file. Florida buyers pairing a gift with first-time buyer programs should confirm how each source documents, since assistance funds follow program rules rather than gift rules.
Someone offering to help with a down payment is worth a conversation before the transfer happens. Reach Edge Mortgage USA through the contact form, or start a purchase application and have a loan officer map the documentation to your program.
This article is for educational purposes only and is not lending, legal, or tax advice. Program guidelines, investor requirements, and lender procedures change over time and vary by loan program, property type, occupancy, and individual circumstances. Gift tax questions should be directed to a qualified tax professional. Nothing here is an offer or commitment to lend, and eligibility is determined only through a full application and underwriting review. John Pennington NMLS #717920, Edge Home Finance NMLS #891464. Equal Housing Lender.
