Can I use gifted funds towards my down payment?

Most lenders will accept down payment funds that are a gift from an immediate family member (parent, sibling, child). A gift letter signed by the donor is usually required to confirm that the funds are a true gift and not a loan. If mortgage default insurance is needed (with down payment less than 20%), the lender or insurance provider may require the gift money to be in the purchaser's possession before the application is sent to them for approval.