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Gift Funds for Jumbo Loans — California

Can you use gift funds for a jumbo loan down payment?

Yes — with conditions. Gift funds are allowed on some jumbo loan scenarios but restricted on others.

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When gift funds are allowed

Gift funds from an eligible donor (typically an immediate family member) are permitted on jumbo loans for primary residence purchases with LTV at or below 80%. The gift can be used toward the down payment and/or closing costs, following standard documentation requirements.

When gift funds are NOT allowed

  • LTV above 80%: Gift funds are not permitted when putting less than 20% down — all funds must come from your own verified assets
  • Investment properties: Gift funds are never allowed on investment property transactions
  • First-time buyers, high loan amounts: For first-time buyers in California with loan amounts above $1M, gift funds are not permitted
  • Gift of equity from the seller: Not allowed — gifts must come from a related party, not the seller

Who can be a gift donor?

Gift donors must be related to the borrower — typically immediate family including parents, siblings, children, grandparents, spouses, and domestic partners.

Documentation required for gift funds

  • A signed gift letter confirming no expectation of repayment
  • Documentation showing transfer of funds from donor to borrower
  • Bank statements for both donor and borrower confirming source and receipt

If you’re planning to use a family gift for your jumbo down payment, plan for 20% or more down — that’s when gift funds are most broadly available.

Serving California homebuyers and investors — Orange County, Los Angeles, San Diego, the Inland Empire, and communities throughout Southern California including Irvine, Huntington Beach, Anaheim, Fullerton, Garden Grove, and Santa Ana.

How a gift moves through underwriting

  1. The donor confirms they are an eligible relative and agrees to sign the gift letter.
  2. The donor’s funds move by traceable transfer, such as a wire or check, directly into your account or to the closing agent.
  3. Underwriting matches the donor’s statement, the transfer and your statement. Any gap in the paper trail is flagged.
  4. If the gift is for closing costs, the title company’s final figures should show the receipt.

The donor’s statement should show the money was theirs before the gift. Cash deposits are hard to document, so use a bank transfer.

A worked example: where gift funds fit

This is an illustrative example, not a quote. A buyer purchases at $1,000,000 with 20% down ($200,000). Parents give $100,000 and the buyer supplies $100,000 of their own funds. Because the loan is at 80% LTV on a primary residence, this structure is generally eligible, and the gift covers half the down payment. If the buyer wanted to reduce down payment to 10% ($100,000) on the same home, the gift would no longer be allowed, because gifts are not permitted above 80% LTV, so the entire $100,000 would need to come from the buyer’s own assets.

Common mistakes

  • Depositing a cash gift into your account before the loan application and hoping it will be accepted.
  • Having the donor transfer funds after underwriting has already run.
  • Counting a gift toward reserves. The reserves guide lists gifts as not eligible on most programs.
  • Treating a gift of equity from the seller as a family gift. Seller gifts of equity are not allowed.

Frequently asked questions

Can a gift come from a friend or employer?

Donors generally must be related to the borrower. Friends and employers are generally not accepted.

Does the donor owe gift tax?

Gift tax questions belong with a tax professional, since the answer depends on the amount and the donor’s situation. The lender only needs the letter and documentation.

Can the gift be paid directly to escrow?

Often yes, with the donor’s transfer documentation and a copy of the gift letter. Ask us how to route it so the paper trail is complete.

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