Yes. Both Fannie Mae (conventional) and FHA loans let you use gift money for your down payment and closing costs. Fannie Mae allows gifts from relatives and people with a family-like bond, for a main home or a second home, but not for an investment property. On a one-unit main home, all of your down payment can be a gift. FHA allows gifts from family, your employer or labor union, a close friend with a documented interest in you, a charity, or a government homebuyer program. Either way, you need a signed gift letter and proof of how the money moved.
Lots of buyers in Nashville, Franklin, and Brentwood get help from parents or other family. That is fine. The lender just has to know who gave the money, that you do not have to pay it back, and how it got to you.
| Rule | Conventional (Fannie Mae) | FHA |
|---|---|---|
| Who can give | A relative (by blood, marriage, adoption, or guardianship), a domestic partner, a fiancé(e), a former relative, or someone with a long family-like or mentor bond | A family member, your employer or labor union, a close friend with a documented interest in you, a charity, or a government homebuyer program |
| Who cannot give | The builder, developer, real estate agent, or anyone tied to them | Must be one of the approved sources listed |
| Property types | Main home or second home. Not an investment property | Follows FHA's gift rules for the FHA loan |
| Can the whole down payment be a gift? | Yes on a 1-unit main home. Second homes and 2–4 unit homes over 80% loan-to-value need 5% of your own money first | Gifts can count toward FHA's 3.5% minimum investment if they meet the gift rules |
| Cash on hand from the donor | Lender must verify the donor's funds or the transfer | Not allowed. The money must come from an account |
| Fannie Mae gift letter must show | FHA gift letter must show |
|---|---|
| Dollar amount (actual or maximum) | Dollar amount |
| Statement that no repayment is expected | Statement that no repayment is required |
| Donor's name, address, phone, and relationship to you | Donor's name, address, phone, and relationship to you |
| Signed by the donor | Signed and dated by the donor and the borrower |
The lender needs proof the money moved from the donor to you or to the closing agent. Common proof includes the donor's check and your deposit slip, a bank statement showing the withdrawal and your deposit, or a record of the wire or electronic transfer.
Tip: do not just deposit cash. Moving the gift by check or bank transfer makes the paper trail easy.
Often, yes. See Tennessee first-time homebuyer programs and how much down payment you need in Tennessee.
Yes. Parents are approved donors for both Fannie Mae and FHA loans. They will sign a gift letter, and the lender will check how the money moved.
FHA allows a close friend with a clearly defined and documented interest in you. Fannie Mae allows someone with a long-standing family-like or mentor relationship.
On a Fannie Mae loan for a one-unit main home, yes. FHA also lets an approved gift count toward the 3.5% minimum. Second homes and 2 to 4 unit homes have extra Fannie Mae rules.
Not on a Fannie Mae loan. Fannie Mae does not allow gifts on investment properties.
It is a signed letter from the donor. It lists the amount, says you do not have to pay it back, and gives the donor's name, address, phone, and relationship to you.
For FHA, cash on hand is not an acceptable source. For any loan, a check or bank transfer makes the paper trail easy to prove.
Getting help from family on a home in Middle Tennessee? I can walk you and your donor through the paperwork. Call me at (615) 495-6594, email travis@heathrowmtg.com, or start an application.
Figures checked October 11, 2026. Rules and rates can change. Examples are for illustration only and are not a loan offer.
