Fannie Mae Selling Guide B3-4.3-04 — Personal Gifts

Fannie Mae Selling Guide B3-4.3-04 — Personal Gifts

Effective 2026-02-04 · publisher's stamp for this provision

B3-4.3-04, Personal Gifts (02/04/2026) Introduction This topic contains information on personal gifts, including: Gift Funds Acceptable Donors Minimum Borrower Contribution Requirements Documentation Requirements Verifying Donor Availability of Funds and Transfer of Gift Funds Gift Funds A borrower of a mortgage loan secured by a principal residence or second home may use funds received as a personal gift from an acceptable donor. Gift funds may fund all or part of the down payment, closing costs, or financial reserves subject to the minimum borrower contribution requirements below. Gifts are not allowed on an investment property. Note: A gift of equity may not be used for financial reserves. For additional information, see B3-4.3-05, Gifts of Equity. Acceptable Donors A gift can be provided by: a relative, defined as the borrower’s spouse, child, or other dependent, or by any other individual who is related to the borrower by blood, marriage, adoption, or legal guardianship; or a non-relative that shares a familial relationship with the borrower defined as a domestic partner (or relative of the domestic partner), individual engaged to marry the borrower, former relative, or an individual with a long-standing familial-like or mentorship relationship with the borrower. The donor may not be, or have any affiliation with, the builder, the developer, the real estate agent, or any other interested party to the transaction. Note: Gift funds from the seller who is also an acceptable donor and not affiliated with any other interested party to the transaction are allowed. The donor of a gift of equity is not considered an interested party to the transaction. See B3-4.3-06, Grants and Lender Contributions, for information about donations from entities (grants). Minimum Borrower Contribution Requirements The following table describes the minimum borrower contribution requirements for transactions that contain gifts. LTV, CLTV, or HCLTV Ratio Minimum Borrower Contribution Requirement from Borrower’s Own Funds 80% or less One- to four-unit principal residence Second home A minimum borrower contribution from the borrower’s own funds is not required. All funds needed to complete the transaction can come from a gift. Greater than 80% One-unit principal residence A minimum borrower contribution from the borrower's own funds is not required. All funds needed to complete the transaction can come from a gift. Two- to four-unit principal residence Second home The borrower must make a 5% minimum borrower contribution from their own funds. 1 After the minimum borrower contribution has been met, gifts can be used to supplement the down payment, closing costs, and reserves. See B5-6-02, HomeReady Mortgage Underwriting Methods and Requirements, for HomeReady mortgage minimum borrower contribution and down payment requirements. Documentation Requirements Gifts must be evidenced by a letter signed by the donor, called a gift letter. When the gift is sourced by a trust established by an acceptable donor or an estate of an acceptable donor, the gift letter must be signed by the donor and list the name of the trust or the estate account. The gift letter must: specify the actual or the maximum dollar amount of the gift; include the donor’s statement that no repayment is expected; and indicate the donor’s name, address, telephone number, and relationship to the borrower. Note: If the actual amount of the gift received is different than the amount used to underwrite the loan casefile in DU, the lender may need to resubmit the loan casefile to DU in accordance with B3-2-10, Accuracy of DU Data, DU Tolerances, and Errors in the Credit Report. For manually underwritten loans, the lender must verify the borrower has sufficient funds for closing, down payment and/or financial reserves. When a gift from an acceptable donor is being pooled with the borrower’s funds to make up the required minimum cash down payment, the following items must also be included: A certification from the donor stating that they have lived with the borrower for the past 12 months and will continue to do so in the new residence. Documents that demonstrate a history of borrower and donor shared residency. The donor’s address must be the same as the borrower’s address. Examples include but are not limited to a copy of a driver’s license, a bill, or a bank statement. Verifying Donor Availability of Funds and Transfer of Gift Funds The lender must verify that sufficient funds to cover the gift are either in the donor’s account (such as a checking, savings or investment account, or trust or estate account owned by the donor) or have been transferred to the borrower’s account. Acceptable documentation includes the following: a copy of the donor’s check and the borrower’s deposit slip, a copy of the donor’s withdrawal slip and the borrower’s deposit slip, evidence of the electronic transfer of funds from the donor's account to the borrower's account or to the closing agent; a copy of the donor’s check to the closing agent, or a settlement statement showing receipt of the donor’s check. When the funds are not transferred prior to settlement, the lender must document that the donor gave the closing agent the gift funds in the form of an electronic transfer, certified check, a cashier’s check, or other official check. If the borrower receives a gift from an acceptable donor who has lived with the borrower for the last 12 months, the gift is considered the borrower’s own funds and may be used to satisfy the minimum borrower contribution requirement as long as both individuals will use the home being purchased as their principal residence.

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