Guideline answers · FHA

FHA · Assets

What are FHA's rules for gift funds?

Gifts can come from a family member, an employer or labor union, a close friend with a documented interest in the borrower, a charity, or a government homeownership program. The donor and the borrower sign and date a gift letter, the transfer is documented, and the donor cannot use cash on hand.

Checked against the sources below on October 29, 2026. Reviewed by Chris Black, NMLS 275073, on November 2, 2026.

The rules

• Acceptable donors: the borrower's family member; employer or labor union; a close friend with a clearly defined and documented interest in the borrower; a charitable organization; a government agency or public entity with a homeownership program for low- or moderate-income families or first-time buyers.
• Gift letter, signed and dated by the donor and the borrower: the donor's name, address and phone number, the relationship, the dollar amount, and a statement that no repayment is required.
• Before settlement, document the transfer with the donor's bank statement showing the withdrawal, the donor's canceled check, or a withdrawal receipt, each with the deposit into the borrower's account, or with evidence of an electronic transfer.
• The donor's cash on hand is not an acceptable source.
• The 3.5% minimum required investment cannot come from the seller or anyone who benefits financially from the transaction. Interested party contributions cannot be used for it.
• A gift of equity is allowed only between family members.

Watch for

• Reflects HUD Handbook 4000.1 Update-18 sections effective November 10, 2026. Case numbers assigned before then follow the prior text.
• A gift used for the minimum required investment must also meet the source rules for that investment.
• Lenders may ask for more transfer documentation than the handbook requires.

Sources

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