Selling Guide

Published October 06, 2021

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What are the minimum borrower contribution requirements for transactions that contain gifts?

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 his or her 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.

1

If the borrower receives a gift from a relative or domestic partner who has lived with the borrower for the last 12 months, or from a fiancé or fiancée, 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.

For minimum borrower contribution requirements for transactions that contain donated gifts or grant funds, employer assistance, and Community Seconds, refer to B3-4.3-06, Grants and Lender Contributions; B3-4.3-08, Employer Assistance; and B5-5.1-02, Community Seconds Loan Eligibility.

For additional information, see B3-4.3-04, Personal Gifts.

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