Type of Mortgage

• The type of mortgage has an effect on how much of the down payment can be gifted. If you are applying for conventional mortgages, for example, the website Smart Money states that most lenders will want you to have at least 5 percent of the home's value from your own money. The gifted portion will be added to the top of this. The lender might waive this requirement if the gifted amount is more than 20 percent. If you are applying for an FHA mortgage, though, the full amount of the down payment can be gifted.
  
  

Gifting Money and Taxes

• At the time of publication, individuals are allowed to give up to $13,000 away tax-free. Parents can give $13,000 from each parent, for a total of $26,000. For amounts of money exceeding this limit, the person might have to pay a gift tax on the money if the money falls outside of a $1 million lifetime exemption.
  
  

Who Can Gift

• Lenders typically require a statement from the person gifting the money saying that the money is a gift and the borrower will not have to repay this amount. Because of this, the lender usually restricts who can gift money for a down payment to direct relatives and may not allow you to use a gift from a friend as a down payment.
  
  

Deciding How Much to Gift

• If you are the person planning to gift money, it's wise to consider how much money you should gift. When a borrower has at least 20 percent of the home's value as a down payment, he does not have to buy private mortgage insurance, which makes a smaller payment and a more likely "yes" from the lender. Giving the person enough to pay 20 percent -- whether the full amount or an amount to push her to the 20 percent when combined with her own funds -- is certainly a nice gesture. However, you also need to look into your own finances to ensure that you can maintain a comfortable future without that money.