Yes. Many Texas buyers can use an eligible gift for some or all of the down payment and closing costs, depending on the loan program, property type, and transaction. The gift must be documented, come from an acceptable source, and truly be a gift—not a loan that must be repaid.
For buyers in Austin, Cedar Park, Leander, Round Rock, and across Texas, family help can make homeownership possible sooner. The key is to plan the transfer with your lender before money moves.
What can mortgage gift funds pay for?
On an eligible conventional purchase, gift funds may be used for all or part of:
- The down payment
- Closing costs and prepaid expenses
- Required financial reserves, when permitted
Fannie Mae’s Personal Gifts guidance, updated February 4, 2026, allows gifts on a principal residence or second home but not on an investment property. Rules differ by loan program, so FHA, VA, USDA, jumbo, and specialty loans should be checked separately before you rely on a gift.
Who can give gift funds on a conventional loan?
Under Fannie Mae’s current rules, acceptable donors include relatives by blood, marriage, adoption, or legal guardianship. Certain non-relatives may also qualify, including a domestic partner, fiancé, former relative, or someone with a long-standing familial-like or mentorship relationship.
The donor generally cannot be the builder, developer, real estate agent, or another interested party to the transaction—or affiliated with one. That restriction helps confirm the money is a genuine personal gift rather than a hidden sales incentive.
Do I need to use any of my own money?
Sometimes no, but it depends on the property and financing.
For a Fannie Mae conventional loan, the current guide says a one-unit primary residence may use gift funds for all funds needed to close, even when financing exceeds 80% of the property value. For certain two- to four-unit primary residences and second homes with financing above 80%, the buyer generally must contribute at least 5% from their own funds before gift funds cover the rest.
This is exactly why a generic online answer can be misleading. The correct plan depends on the loan type, occupancy, number of units, and automated underwriting findings.
What is a gift letter?
A gift letter tells the lender where the money came from and confirms repayment is not expected. For a Fannie Mae conventional loan, it must include:
- The actual or maximum gift amount
- The donor’s statement that no repayment is expected
- The donor’s name, address, and phone number
- The donor’s relationship to the buyer
- The donor’s signature
Your lender will provide the correct form or wording for your loan. Do not create a side repayment agreement. If repayment is expected, the money is not a gift and must be evaluated as borrowed funds.
How does the lender document the transfer?
The lender must verify that the donor has the money or that it was transferred to the buyer or closing agent. Depending on timing, documentation may include:
- Evidence of an electronic transfer
- A donor check and the buyer’s deposit record
- A check sent directly to the closing agent
- A settlement statement showing receipt of the gift
Keep the paper trail simple. Avoid cash, multiple unexplained deposits, transfers through unrelated accounts, or moving money before your lender gives instructions. Those choices can create extra underwriting questions at the worst possible time.
When should gift funds be discussed?
Ideally, during pre-approval. Tell your lender:
- Who will provide the gift
- Approximately how much they plan to give
- Whether the money is already in your account
- Which property type and loan program you are considering
Planning early lets us calculate your real cash-to-close, document the gift correctly, and prevent a last-minute scramble.
Frequently asked questions
Does the donor owe gift tax?
Mortgage eligibility and federal tax reporting are different issues. A gift may have tax-reporting implications even when it is acceptable for the loan. Buyers and donors should ask a qualified tax professional for advice based on the amount and their circumstances.
Can the donor send the money directly to the title company?
Often, yes. Direct delivery to the closing agent can create a clean paper trail, but follow the lender’s exact instructions before sending funds.
Can I use a gift for an investment property?
Not under the Fannie Mae personal-gift rule discussed here. Other programs may have different eligible-funds rules, so verify the specific loan before making an offer.
Is a gift of equity the same as cash gift funds?
No. A gift of equity occurs when an eligible seller transfers part of the property’s equity to the buyer, often in a family sale. It has separate documentation and eligibility requirements.
Let’s build your cash-to-close plan before you shop
If someone plans to help with your Texas home purchase, let’s review the gift before any money moves. I can compare loan options, explain the documentation, and show you how the gift affects your down payment, closing costs, and reserves.
Sources reviewed October 26, 2026:
Suggested disclosure for both posts:
Provided for informational purposes only. This is not a commitment to lend, and not all borrowers will qualify. Information, rates, and programs are subject to change without prior notice and may not be available in all states. Subject to credit and property approval. Not affiliated with any government agency. For licensing information, visit NMLS Consumer Access.