FHA home loans explained for first-time buyers
Chapter 5: help from people who love you
The friendly answer
FHA allows gifts toward the down payment and closing costs from acceptable donors, such as family members, employers and certain charities or government programs. The donor signs a gift letter saying no repayment is expected, and the lender documents where the money came from and how it reached you.
Last reviewed against the primary sources listed below.
Typical paperwork
- A signed gift letter with the donor's details, relationship and amount.
- Proof the donor had the funds.
- Proof of the transfer to you or the closing agent.
Who cannot give
Anyone with a financial interest in the sale, such as the seller or the real estate agent, generally cannot be the donor. HUD's handbook sets the details.
Down payment assistance
State and local housing agencies run assistance programs that can work with FHA. A HUD-approved housing counselor can tell you which ones serve your area.
First-time buyers often ask
Can a down payment be a gift on an FHA loan?
Yes, from acceptable donors with a signed gift letter and documentation of the funds and transfer.
Are there first-time home buyer programs in my state?
Most state housing finance agencies run programs. A HUD-approved housing counselor can point you to them.