# FHA gift letter: HUD’s donor rules and the transfer proof underwriters want [Home](/) / [Document guides](/documents) / [Gift letter](/documents/gift-letter) / FHA gift letter By [Arthur Teboul](/authors/arthur-teboul), Founder, DokuTrak. Published 2026-10-30, updated 2026-10-30. > **In brief:** An FHA gift letter is the statement HUD requires when someone gives you money for an FHA-insured home: the donor’s name, address, phone, relationship to you, the dollar amount and a no-repayment promise. Both the donor and you sign and date it, and the lender adds proof of how the money moved. ## What is an FHA gift letter? **An FHA gift letter** is the written record a lender keeps when a gift helps pay for a home bought with an FHA-insured mortgage. HUD Handbook 4000.1 lists four items it must carry: the donor’s name, address and telephone number, the relationship, the dollar amount, and a statement that no repayment is required ([HUD Handbook 4000.1, II.A.4 Gifts (Personal and Equity)](https://www.hud.gov/sites/default/files/Housing/documents/40001-hsgh-Update-18.pdf)). The donor and the borrower both sign and date it ([HUD Handbook 4000.1, II.A.4 Gifts (Personal and Equity)](https://www.hud.gov/sites/default/files/Housing/documents/40001-hsgh-Update-18.pdf)). Handbook 4000.1 consolidates FHA’s earlier handbooks and mortgagee letters into one source ([HUD, Single Family Housing Policy Handbook 4000.1 information page](https://www.hud.gov/hud-partners/single-family-handbook-4000-1)). Older FHA handbook pages still found online, such as the retired credit analysis chapters, are superseded, so check any rule they quote against the current handbook. The letter is only the first half of the file. The lender must also trace the money from the donor to you or to the settlement agent, and make a reasonable call that the funds did not come from an unacceptable source ([HUD Handbook 4000.1, II.A.4 Gifts (Personal and Equity)](https://www.hud.gov/sites/default/files/Housing/documents/40001-hsgh-Update-18.pdf)). ## Who sends it, and when The donor fills in and signs the letter, and the borrower countersigns it. On FHA loans that second signature is not optional, so plan a moment when both of you can sign. Many loan officers send their own FHA gift form; the template below follows the same four HUD items if yours does not. The donor also supplies the bank record of the withdrawal, and the borrower supplies the record of the deposit. ## Where to get an FHA gift letter 1. Tell your loan officer early that part of your funds is a gift, and ask for the lender’s FHA gift form. 2. Check that the donor fits one of HUD’s accepted donor types, and how the lender wants a close friend’s tie to you documented. 3. Fill in the letter with the donor, using the exact amount, then have the donor and every borrower sign and date it. 4. Agree on the timing: money in your account before settlement, or sent by the donor straight to the settlement agent. 5. Collect the matching proof for that timing and send it with the letter. ## Wrong files people send instead - Only the donor’s signature. HUD wants the borrower’s signature and date on the same letter. - Gift money that started as cash kept at home. HUD does not accept cash on hand as the donor’s source. - Your bank statement showing a deposit, with nothing from the donor’s side showing the withdrawal. - A friend listed as donor with no explanation of how the relationship is documented. - A seller who is not a relative offering a gift of equity, which FHA limits to family sales. ## Who HUD accepts as a donor HUD names the donor types it accepts, and the list is wider than a conventional loan’s. Pick the matching row and write it in the relationship line of the letter. | Donor type | Accepted for FHA | What the lender will want to see | | --- | --- | --- | | Family member | Yes ([HUD Handbook 4000.1, II.A.4 Gifts (Personal and Equity)](https://www.hud.gov/sites/default/files/Housing/documents/40001-hsgh-Update-18.pdf)) | Relationship stated in the letter | | Employer or labor union | Yes ([HUD Handbook 4000.1, II.A.4 Gifts (Personal and Equity)](https://www.hud.gov/sites/default/files/Housing/documents/40001-hsgh-Update-18.pdf)) | Employer or union name on the letter and the transfer | | Close friend | Only with a clearly defined and documented interest in you ([HUD Handbook 4000.1, II.A.4 Gifts (Personal and Equity)](https://www.hud.gov/sites/default/files/Housing/documents/40001-hsgh-Update-18.pdf)) | A short note on how long and how you know each other | | Charitable organization | Yes ([HUD Handbook 4000.1, II.A.4 Gifts (Personal and Equity)](https://www.hud.gov/sites/default/files/Housing/documents/40001-hsgh-Update-18.pdf)) | The charity’s letter and transfer record | | Government agency or public entity | Yes, if its program helps low- or moderate-income families or first-time buyers ([HUD Handbook 4000.1, II.A.4 Gifts (Personal and Equity)](https://www.hud.gov/sites/default/files/Housing/documents/40001-hsgh-Update-18.pdf)) | Program documents from the agency | | Seller, builder, real estate agent, lender | Not for your minimum investment ([HUD Handbook 4000.1, II.A.4 Gifts (Personal and Equity)](https://www.hud.gov/sites/default/files/Housing/documents/40001-hsgh-Update-18.pdf)) | Treated as an interested party contribution instead | ## How HUD defines a family member **A family member**, in HUD’s handbook, is defined regardless of sex or legal marital status ([HUD Handbook 4000.1, II.A.4 Gifts (Personal and Equity)](https://www.hud.gov/sites/default/files/Housing/documents/40001-hsgh-Update-18.pdf)). The list includes a child or stepchild, a parent or grandparent, and a stepparent or step-grandparent ([HUD Handbook 4000.1, II.A.4 Gifts (Personal and Equity)](https://www.hud.gov/sites/default/files/Housing/documents/40001-hsgh-Update-18.pdf)). It also covers a spouse or domestic partner, a legally adopted child, and a child placed with you for adoption ([HUD Handbook 4000.1, II.A.4 Gifts (Personal and Equity)](https://www.hud.gov/sites/default/files/Housing/documents/40001-hsgh-Update-18.pdf)). Children placed with you by a child welfare agency, and the parents or grandparents who cared for you under such a placement, are on it too ([HUD Handbook 4000.1, II.A.4 Gifts (Personal and Equity)](https://www.hud.gov/sites/default/files/Housing/documents/40001-hsgh-Update-18.pdf)). Brothers, sisters, step-siblings, uncles, aunts and in-laws are on the list too ([HUD Handbook 4000.1, II.A.4 Gifts (Personal and Equity)](https://www.hud.gov/sites/default/files/Housing/documents/40001-hsgh-Update-18.pdf)). Relatives such as cousins, nieces and nephews are not on that list. If one of them is your donor, ask the lender whether it will treat them as a close friend with a documented interest. ## Proving the transfer: before settlement or at settlement The paper trail depends on when the money moves. HUD gives one list for gifts verified before settlement and another for gifts paid to the settlement agent ([HUD Handbook 4000.1, II.A.4 Gifts (Personal and Equity)](https://www.hud.gov/sites/default/files/Housing/documents/40001-hsgh-Update-18.pdf)). If the money reaches you first, the lender needs one of these records ([HUD Handbook 4000.1, II.A.4 Gifts (Personal and Equity)](https://www.hud.gov/sites/default/files/Housing/documents/40001-hsgh-Update-18.pdf)). Each of the first three must come with proof of the deposit into your account. - The donor’s bank statement showing the withdrawal. - A copy of the donor’s canceled check. - A copy of the donor’s withdrawal receipt. - Evidence of an electronic transfer from the donor’s account to yours. 1. If the donor pays at closing instead, the payment to the settlement agent must be an electronic transfer from the donor’s account, a bank certified check, a cashier’s check or another official bank check ([HUD Handbook 4000.1, II.A.4 Gifts (Personal and Equity)](https://www.hud.gov/sites/default/files/Housing/documents/40001-hsgh-Update-18.pdf)). 2. If the gift is land, the lender needs proof the donor owned it and evidence that title passed to you ([HUD Handbook 4000.1, II.A.4 Gifts (Personal and Equity)](https://www.hud.gov/sites/default/files/Housing/documents/40001-hsgh-Update-18.pdf)). 3. Whatever the route, keep the donor’s statement that shows the money sitting in a bank account first, because cash on hand is not an acceptable donor source ([HUD Handbook 4000.1, II.A.4 Gifts (Personal and Equity)](https://www.hud.gov/sites/default/files/Housing/documents/40001-hsgh-Update-18.pdf)). ## Gift of equity when family sells to family **A gift of equity** is a price below market value, where the seller gives you part of the home’s equity instead of cash. Under FHA rules, only family members may give equity, and only on a home sold to other family members ([HUD Handbook 4000.1, II.A.4 Gifts (Personal and Equity)](https://www.hud.gov/sites/default/files/Housing/documents/40001-hsgh-Update-18.pdf)). The paperwork is the same letter: names, contact details, relationship, the dollar amount of the equity, and no repayment, signed and dated by the seller and you ([HUD Handbook 4000.1, II.A.4 Gifts (Personal and Equity)](https://www.hud.gov/sites/default/files/Housing/documents/40001-hsgh-Update-18.pdf)). The equity figure should match the gap between the agreed price and the appraised value on the sales contract. ## Gifts and the minimum required investment **The minimum required investment** is the cash you must put into an FHA purchase, at least 3.5 percent of the adjusted value of the home ([HUD Handbook 4000.1, II.A.4 Gifts (Personal and Equity)](https://www.hud.gov/sites/default/files/Housing/documents/40001-hsgh-Update-18.pdf)). A gift from an accepted donor can cover it, but none of it may come from the seller or anyone else who benefits from the sale ([HUD Handbook 4000.1, II.A.4 Gifts (Personal and Equity)](https://www.hud.gov/sites/default/files/Housing/documents/40001-hsgh-Update-18.pdf)). HUD calls those people **interested parties**: sellers, real estate agents, builders, developers, lenders and others with a stake in the deal ([HUD Handbook 4000.1, II.A.4 Gifts (Personal and Equity)](https://www.hud.gov/sites/default/files/Housing/documents/40001-hsgh-Update-18.pdf)). Their help is capped at 6 percent of the sales price, goes toward closing costs and similar items, and may not fund your minimum investment ([HUD Handbook 4000.1, II.A.4 Gifts (Personal and Equity)](https://www.hud.gov/sites/default/files/Housing/documents/40001-hsgh-Update-18.pdf)). On a manually underwritten loan, surplus gift money does not count as cash reserves ([HUD Handbook 4000.1, II.A.4 Gifts (Personal and Equity)](https://www.hud.gov/sites/default/files/Housing/documents/40001-hsgh-Update-18.pdf)). Ask the loan officer how your file is being underwritten before you size the gift. ## FHA gift letter or conventional gift letter? The [general mortgage gift letter guide](/documents/gift-letter) covers the conventional side in depth, and the donor’s gift tax questions too. Here is where an FHA file parts ways with a Fannie Mae one. | Point | FHA (HUD 4000.1) | Conventional (Fannie Mae) | | --- | --- | --- | | Who signs the letter | Donor and borrower, each dated ([HUD Handbook 4000.1, II.A.4 Gifts (Personal and Equity)](https://www.hud.gov/sites/default/files/Housing/documents/40001-hsgh-Update-18.pdf)) | Donor ([Fannie Mae Selling Guide B3-4.3-04, Personal Gifts](https://selling-guide.fanniemae.com/sel/b3-4.3-04/personal-gifts)) | | Employer or union as donor | Accepted ([HUD Handbook 4000.1, II.A.4 Gifts (Personal and Equity)](https://www.hud.gov/sites/default/files/Housing/documents/40001-hsgh-Update-18.pdf)) | Not a personal-gift donor; Fannie Mae treats employer programs under its grant rules ([Fannie Mae Selling Guide B3-4.3-04, Personal Gifts](https://selling-guide.fanniemae.com/sel/b3-4.3-04/personal-gifts)) | | Friend as donor | Close friend with a documented interest | Long-standing familial-like or mentor tie | | Own-funds rule | 3.5% minimum investment, which a gift can fund ([HUD Handbook 4000.1, II.A.4 Gifts (Personal and Equity)](https://www.hud.gov/sites/default/files/Housing/documents/40001-hsgh-Update-18.pdf)) | 5% own funds on some two- to four-unit and second-home loans ([Fannie Mae Selling Guide B3-4.3-04, Personal Gifts](https://selling-guide.fanniemae.com/sel/b3-4.3-04/personal-gifts)) | | Cash kept at home | Not an acceptable donor source | Lender verifies the donor’s account or the transfer | ## The template: FHA gift letter (HUD Handbook 4000.1) For an FHA-insured purchase. The donor completes it, then the donor and every borrower sign and date it. Keep the timing clause that matches how the money moves, and add the transfer proof listed on this page. Employer, union, charity or government gifts usually come on the giver’s own letter or program papers, so use this template for a person giving. ```text Gift letter, FHA-insured mortgage [Date] Lender: [Lender name] FHA case or loan number: [Number, if assigned] Borrower(s): [Borrower full name(s)] Property: [Property address, or "to be determined" if the lender allows it] To the underwriter, Donor Donor full name: [Donor name]. Street address: [Donor street address, city, state, ZIP]. Telephone: [Donor phone number]. Donor type and relationship I am the borrower’s [relationship, for example father, sister, mother-in-law]. I give as [a family member / the borrower’s employer / the borrower’s labor union / a close friend / a charitable organization / a government homeownership program]. Amount The amount of this gift is $[exact dollar amount]. Repayment No repayment is required. The borrower owes me nothing for these funds, in cash or in services, at any time. Where the funds sit The funds are held in my [checking / savings / money market] account at [Financial institution]. They are not cash kept outside a financial institution. Timing of the transfer The funds [were transferred to the borrower’s account on [transfer date] / will be paid to [Settlement agent name] at settlement by wire, certified check, cashier’s check or official bank check]. No stake in the sale (optional) I am not the seller, a real estate agent, the builder, the developer or the lender in this purchase, and no such party will reimburse me. (Use this clause unless the gift-of-equity clause applies.) Close friend (optional) I have known the borrower since [year], as [how you know each other]. I can supply [documents showing the relationship] if the lender asks. Gift of equity (optional) I am the seller of the property and a family member of the borrower. I am giving $[equity amount] of equity, the difference between the appraised value of $[appraised value] and the sales price of $[sales price]. Gift of land (optional) The gift is the land at [land address or parcel number], which I owned before transferring title to the borrower on [title transfer date]. Donor signature: ____________________ Date: __________ [Donor name] Borrower signature: ____________________ Date: __________ [Borrower name] Co-borrower signature: ____________________ Date: __________ [Co-borrower name, if any] ``` Download: [Word](https://dokutrak.com/downloads/pseo-v2/f6-document-guides/gift-letter/fha.docx) · [PDF](https://dokutrak.com/downloads/pseo-v2/f6-document-guides/gift-letter/fha.pdf) ## Questions people ask ### Does an FHA gift letter have to be notarized? HUD’s list for the letter asks for the donor’s and borrower’s signatures and dates, with no notary ([HUD Handbook 4000.1, II.A.4 Gifts (Personal and Equity)](https://www.hud.gov/sites/default/files/Housing/documents/40001-hsgh-Update-18.pdf)). Some lenders add a notary step of their own, so check the form your loan officer sends. ### Can the whole FHA down payment be a gift? Yes, if the donor is one HUD accepts and the money does not come from the seller or another party who benefits from the sale ([HUD Handbook 4000.1, II.A.4 Gifts (Personal and Equity)](https://www.hud.gov/sites/default/files/Housing/documents/40001-hsgh-Update-18.pdf)). The transfer still has to be traced from the donor’s account. ### Can my parents give me cash for an FHA loan? Not as cash from a drawer or safe: HUD does not accept cash on hand as a donor’s source ([HUD Handbook 4000.1, II.A.4 Gifts (Personal and Equity)](https://www.hud.gov/sites/default/files/Housing/documents/40001-hsgh-Update-18.pdf)). The money should move from the donor’s bank account by transfer or official check. ### Who signs the FHA gift letter? Both the donor and the borrower sign and date it under Handbook 4000.1 ([HUD Handbook 4000.1, II.A.4 Gifts (Personal and Equity)](https://www.hud.gov/sites/default/files/Housing/documents/40001-hsgh-Update-18.pdf)). If two people are buying, have each borrower sign. ### Can a friend give me money for an FHA loan? A close friend can, if the friend has a clearly defined and documented interest in you ([HUD Handbook 4000.1, II.A.4 Gifts (Personal and Equity)](https://www.hud.gov/sites/default/files/Housing/documents/40001-hsgh-Update-18.pdf)). Expect the lender to ask how long you have known each other and how. **Not advice.** This page is general information, not tax, legal or HR advice. Rules change: check the cited source and ask your own professional before you rely on it. Last reviewed October 25, 2026. ## Sources - [HUD Handbook 4000.1, II.A.4 Gifts (Personal and Equity)](https://www.hud.gov/sites/default/files/Housing/documents/40001-hsgh-Update-18.pdf): Lists who may give FHA gift funds, rules out cash on hand, requires a gift letter signed and dated by donor and borrower, sets the transfer evidence before and at settlement, and limits gifts of equity to family members. - [HUD, Single Family Housing Policy Handbook 4000.1 information page](https://www.hud.gov/hud-partners/single-family-handbook-4000-1): Handbook 4000.1 is a consolidated source of FHA single family housing policy: hundreds of FHA handbooks, mortgagee letters, housing notices and other policy documents were consolidated into it. - [Fannie Mae Selling Guide B3-4.3-04, Personal Gifts](https://selling-guide.fanniemae.com/sel/b3-4.3-04/personal-gifts): On a conventional loan the gift letter is signed by the donor, donors are relatives or people in a familial-type relationship, donations from entities fall under the grant rules of B3-4.3-06, and a 5% own-funds contribution applies to some two- to four-unit homes and second homes. ## More on this topic - [Gift letter for a mortgage](/documents/gift-letter) - [Mortgage document checklist](/blog/mortgage-document-checklist) - [Bank statement guide](/documents/bank-statement) - [Document collection for mortgage brokers](/for/mortgage-brokers) - [Tax Documents for Mortgage: Lender List and Form 1098](/checklists/tax-documents/mortgage-applicants) ## About the author Arthur Teboul (Founder, DokuTrak) is building DokuTrak after watching professionals lose hours chasing clients for documents over email. [Arthur Teboul](/authors/arthur-teboul). How this page was made (methodology): it is built from the primary sources listed under Sources, and every rule and figure on it links to the source it comes from. Last updated October 25, 2026. Spotted an error or a rule that changed? [Contact us](/contact). ## Ask once. DokuTrak does the chasing. - Your client uploads from one link, with no account and no password. - Reminders go out on a schedule, by default 2, 5, 10 and 14 days after the request, until the file arrives. - With AI review switched on in your workspace (it is off by default), each upload gets a first pass that flags a file that is not a bank statement, an unreadable or blurry scan or a copy where one of these is missing or cut off: the account holder, the statement period. It says so when it is not sure. - You accept every file or mark it for re-upload, and your client gets the note by email. The AI never accepts a file. 14-day free trial, no card. Add one only to keep going. [Request this document with DokuTrak](https://app.dokutrak.com/sign-up?docs=bank-statement)