Are Gift Funds Allowed on an Investment Property Purchase?

Posted May 26, 2024


You have received a large cash gift, and you plan to buy a real estate investment. However, can gift funds be used for an investment property purchase? 

If you are pursuing a loan with a conventional bank loan, the answer is no; gift funds cannot be used on a property that is solely for investment purposes. This includes cash gifts or gifts of equity. 

However, there are no laws preventing the use of gift funds or gift equity for the purchase of an investment property not using a conventional loan. This is a guideline set up by federally backed Freddie Mac and Fannie Mae. 

If you obtain a conventional bank loan, gift funds can be used to purchase a primary or secondary residence. That means that if you are planning on residing in the property, even part-time, you may be able to use gift funds. If you will not live there, gift funds cannot be used. 

It isn’t that simple, though. Even in cases where gift funds can be used for a real estate purchase, there are guidelines on where the funds can come from. For instance, the funds must come from an acceptable donor source. This includes: 

  • A relative (by blood, marriage, legal guardianship, or adoption)
  • Fiance 
  • Domestic partner 

To confirm where the donor funds came from, the bank will require a gift letter and verify the funds with a copy of the donor’s check and deposit slip, the donor’s withdrawal and recipient's deposit receipts, or an official type of check, like a cashier’s check.


This material is for general information and educational purposes only. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed as to accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions.

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