Using Gift Funds for a Down Payment in Washington: Donor Rules and Paperwork (2026)
Short answer: Many Washington buyers use gift funds from a parent, relative or other acceptable donor for part or all of the down payment. On a Fannie Mae loan for a home you will live in (or a second home), that is allowed when the donor meets the guide’s relationship rules, the gift is documented with a gift letter, and the lender can see the money leave the donor and arrive with you or with escrow. Investment properties cannot use gift funds under that guide topic. A seller credit is different: it helps with closing costs, not the down payment.
What counts as an acceptable donor
Fannie Mae Selling Guide B3-4.3-04 (topic dated Feb 4, 2026; guide published Nov 4, 2026 on Fannie Mae’s site) lets a borrower use a personal gift on a principal residence or second home. Acceptable donors include relatives by blood, marriage, adoption or legal guardianship, and a short list of non-relatives with a familial relationship (domestic partner or their relative, someone engaged to marry the borrower, a former relative, or a person with a long-standing familial-like or mentorship relationship).
The donor cannot be—or be affiliated with—the builder, developer, real estate agent or any other interested party to the sale. One exception: gift funds from a seller who is also an acceptable donor and is not affiliated with any other interested party are allowed. Grants from entities are a different topic (B3-4.3-06) and are not covered here.
How much of your own money you still need
Source: Fannie Mae Selling Guide B3-4.3-04. HomeReady and other special products can have their own contribution rules; your lender will apply the product you actually use. FHA, VA and other programs have separate donor and documentation rules—confirm those with the lender rather than assuming the Fannie Mae table applies.
Paper trail the lender will expect
If gift funds are pooled with yours to meet a required minimum cash down payment, and the donor has lived with you for the past 12 months and will live in the new home too, Fannie Mae treats that gift as the borrower’s own funds for the minimum-contribution test—but only with the extra shared-residency certification and matching-address documents the guide lists.
Practical tips for King and Snohomish County closings
- Start the gift letter early. Waiting until underwriting conditions arrive creates rush wires and incomplete letters.
- Move money in a traceable way. Cashier’s checks, official checks or bank-to-bank transfers beat ATM cash deposits.
- Tell your agent and escrow that gift funds are coming, so the Closing Disclosure and wire instructions line up. For wire-fraud caution, see closing wire fraud.
- Do not mix this up with a seller credit. If you also need help with closing costs, that is a separate negotiation under IPC rules; see our seller-concessions article in this pack.
FAQ
Can I use gift money for a down payment in Washington?
Yes, if your loan program allows it and the donor qualifies. On a Fannie Mae loan secured by a principal residence or second home, gift funds from an acceptable donor may pay all or part of the down payment, closing costs or reserves, subject to the minimum borrower contribution rules below. Gifts are not allowed on an investment property under that guide topic.
Who can give me gift funds?
Fannie Mae’s acceptable-donor list includes a relative (spouse, child or other dependent, or anyone related by blood, marriage, adoption or legal guardianship) and certain non-relatives with a familial relationship (domestic partner or their relative, fiancé, former relative, or someone with a long-standing familial-like or mentorship relationship). The donor may not be, or be affiliated with, the builder, developer, real estate agent or any other interested party to the transaction—except that a seller who is also an acceptable donor and not affiliated with other interested parties may give gift funds.
Do I still need some of my own money?
It depends on the loan-to-value and the property type. On a Fannie Mae loan, if LTV/CLTV/HCLTV is 80% or less, no minimum borrower contribution is required for a principal residence or second home. Above 80% LTV, a one-unit principal residence still needs no minimum from your own funds, but a two- to four-unit principal residence or a second home requires a 5% contribution from your own funds before gifts can fill the rest.
What paperwork will the lender ask for?
At minimum: a gift letter with the amount, the no-repayment statement, and the donor’s contact and relationship details, plus proof the donor had the funds and that they moved to you or to escrow. Large last-minute cash deposits without a paper trail are a common reason underwriting stalls.
Is a gift the same as a seller credit?
No. A seller credit is an interested party contribution toward closing costs and is capped by the loan’s IPC rules; it cannot fund your down payment on a Fannie Mae or FHA loan. A personal gift from an acceptable donor can fund down payment (with the limits above) and is documented as a gift, not as an IPC—unless the donor is an interested party who does not qualify for the gift exception.
Talk it through with a local agent
Peter Kim and Odigo Real Estate Club coordinate gift-fund timing with your lender and escrow so underwriting is not guessing at the last minute, with 25+ years combined experience, 593+ closings, and 122 five-star Zillow reviews. See our home buying services. Related reading: earnest money, closing process, first-time buyer guides, true cost of selling a house in Washington.
Odigo Real Estate Club · REAL Brokerage, WA #112064 · 16108 Ash Way, Suite 201, Lynnwood, WA 98087 · (425) 409-3823 · Mon–Sat 9 AM–6 PM, closed Sunday
Sources
- Fannie Mae, Selling Guide B3-4.3-04, Personal Gifts (acceptable donors; minimum borrower contribution; gift letter and transfer documentation), https://selling-guide.fanniemae.com/sel/b3-4.3-04/personal-gifts , accessed Nov 5, 2026.
- Fannie Mae, Selling Guide B3-4.1-02, Interested Party Contributions (IPCs) (financing concession limits by LTV/CLTV for principal residence / second home / investment; sales concessions; exclusions), https://selling-guide.fanniemae.com/sel/b3-4.1-02/interested-party-contributions-ipcs , accessed Nov 5, 2026.
- Consumer Financial Protection Bureau, Closing Disclosure (reviewing closing documents before you sign), https://www.consumerfinance.gov/owning-a-home/closing-disclosure/ , accessed Nov 5, 2026.
About the Author
Peter Kim
Peter Kim is the owner of Odigo Real Estate Club, a leading real estate agency in the Greater Seattle area that specializes in residential, commercial, and luxury properties. With over 25 years of combined experience and a team of highly skilled agents, Peter brings a wealth of knowledge and expertise to the real estate space.
