How Much of My Down Payment Can Be a Gift in Texas?

I'm Bond Peter Njoku (NMLS #2670329), and I get this question from nearly every first-time buyer whose family wants to help: "How much can my parents actually give me toward the down payment?" The honest answer surprises most people — on FHA and VA loans, the entire down payment can be a gift, and there's no dollar cap on the amount. The real rules aren't about how much, they're about who can give it and how well it's documented. Let's walk through exactly what that means.

How Much of My Down Payment Can Be a Gift by Loan Type in Texas?

Conventional loans through Fannie Mae and Freddie Mac allow gift funds for the full down payment on most primary-residence purchases, though there are some property-type and loan-to-value nuances I check case by case. Investment properties are the one clear exception — those generally require the borrower's own funds, not gifts.

Is There a Dollar Limit on How Much Can Be Gifted?

No — and this is where I see the most confusion. There's no mortgage-industry cap on the gift amount itself. What people are usually thinking of is the IRS annual gift tax exclusion (roughly $19,000 per recipient), which determines whether your donor needs to file a gift tax return — it has nothing to do with how much they're allowed to give you for a house. A parent can gift you $60,000 toward a down payment with no mortgage-rule problem at all; they'd just need to talk to a tax professional about their own filing requirements above the exclusion amount. I always tell clients: the gift tax exclusion is a donor-side IRS question, not a mortgage qualifying limit.

Who Is Allowed to Gift Down Payment Funds in Texas?

• Immediate family — parents, siblings, grandparents, and often a fiancé or domestic partner are standard acceptable donors.
• Not an interested party. The money cannot come from your real estate agent, the builder, the seller, or anyone else with a financial stake in the transaction closing.
• Documented relationship. Some loan programs ask for a brief explanation of the relationship if it's not immediately obvious from a shared last name.

What Documentation Does the Underwriter Actually Want?

This is where deals get held up if buyers move too fast. A gift letter alone isn't enough — underwriters call the full process "sourcing and seasoning," and it means three things: a signed gift letter confirming no repayment is expected, proof the donor actually had the funds to give (a bank statement), and proof of the transfer itself (a withdrawal from the donor's account matching a deposit into yours). I always tell clients: don't move gift money until we've talked, because the timing and paper trail matter more than the gift letter's wording.

Named Scenario: Stacking a Gift With FHA in Frisco

Here's a composite scenario built from clients I've worked with. A young couple in Frisco found a $340,000 starter home but had only $6,000 saved — not enough for FHA's 3.5% down ($11,900) plus closing costs. Her parents gifted $20,000, fully documented with a gift letter, a bank statement showing the funds, and a matching wire transfer three weeks before closing. That covered the full down payment with room left over for part of their closing costs. At 6.9% over 30 years on their $327,900 FHA loan, principal and interest came to about $2,160/month, plus roughly $195/month FHA mortgage insurance and an estimated $565/month for Collin County taxes and insurance — a PITI near $2,920/month, well within their combined budget.

How Do I Get Started If I'm Planning to Use Gift Funds?

Talk to me before any money moves. I'll send you a gift letter template, tell your donor exactly what documentation to gather, and make sure the timing lines up so there are no unexplained large deposits that slow down underwriting. I'm Bond Peter Njoku (NMLS #2670329), and getting this sequence right the first time saves weeks compared to fixing it after the fact.