Yes — you can use gift funds on a DSCR investment-property loan, but only up to 50% of the total required down payment and closing costs, only from a close relative, and never toward reserves. Those three limits are separate, and the third quietly kills files: a gift that is fine for your down payment does nothing for the reserve requirement behind it.
Below: the cap, the verbatim relative list, the reserves exclusion, the gift letter contents, the transfer trail we need to see, and how to time the deposit.
The three limits, in one place
| Limit | What it is | What it does not cover |
|---|---|---|
| Amount | Up to 50% of the total required down payment and closing costs | The other 50% must come from your own eligible, verified assets |
| Donor | A close relative, defined by a specific list | Uncles, aunts, cousins, nieces, nephews — and any party with an interest in the transaction |
| Use | Cash to close or down payment | Post-closing liquidity (reserves) and P&I reserves |
Limit one: the 50% cap and what it is measured against
The cap is not 50% of the purchase price and it is not 50% of the down payment alone. It is measured against the total required down payment and closing cost — the two added together. Within that combined figure, gift money may only be applied to cash to close or the down payment. The practical read: at least half of everything you bring to the table has to be your own verified money.
An illustration
The figures below are invented for the purpose of showing the arithmetic. They are not a quote, a rate, or an estimate of your costs.
| Line | Amount |
|---|---|
| Purchase price | $400,000 |
| Down payment at 75% LTV | $100,000 |
| Estimated closing costs and prepaids | $12,000 |
| Total required down payment and closing costs | $112,000 |
| Maximum gift at 50% | $56,000 |
| Minimum from borrower's own eligible assets | $56,000 |
If your relative wants to give you $80,000, only $56,000 counts as a gift in this structure. The rest is money the file cannot use as a gift, and parking it in your account early does not convert it.
Limit two: who counts as a close relative
The program defines "close relative" twice, and the two statements sit in the same section. Read both, because a donor has to satisfy the definition, not merely feel like family.
The first statement, in the gift funds requirements:
> the Borrower's spouse, child, or other dependent; or an individual related to the Borrower by blood, marriage, adoption, or legal guardianship; or a fiancé, fiancée, or domestic partner.
The second, the starred definition beneath it, is the enumerated list:
> your mother, father, sister, brother, wife, husband, civil partner, daughter, son, grandparent, grandchild, parent-in-law, son-in-law, daughter-in-law, sister-in-law, brother-in-law, step parent, step child, step sister, step brother, foster child, legal guardian. This list does not include extended family such as uncles, aunts, cousins, or nieces/nephews.
The exclusion of extended family is not an interpretation. It was added in a 05/30/25 revision specifically to state that close relatives do not include uncles, aunts, cousins, or nephews/nieces. Before that, the broader "related by blood or marriage" language could be read to include them. It cannot now.
Note what the enumerated list does include: step and foster relationships, and a legal guardian. If your donor is a stepparent or a legal guardian, they are on the list.
The donor cannot be anyone with an interest in the deal
Separate from the relationship test, there is an affiliation test. The donor may not be, and may not have any affiliation with, the builder, developer, real estate agent, or any other party with an interest in the transaction.
This bites in a specific, common situation: a family member who is also the listing agent, or who is the seller, or who owns a piece of the selling entity. Family sales and transfers are eligible non-arm's-length transactions on this program — but a gift from someone on the other side of the table is not a gift for underwriting purposes. It gets read as an interested party contribution, which has its own much tighter rules.
Limit three: gift funds cannot meet reserves
This is the one that catches people, because it is counterintuitive. Money that is good enough to buy the property is not good enough to sit behind it.
Those are two exclusions stacked on top of each other. The gift is out because it is a gift. Your own money is out to the extent you spent it at the closing table. What is left over after both subtractions is your reserve.
What the reserve requirement actually is
On the DSCR program, reserves are measured in months of PITIA on the subject property, and the requirement moves with the debt service coverage ratio.
- DSCR of 1.0 or greater: 3 months PITIA for the subject property.
- DSCR below 1.0: 6 months PITIA for the subject property.
- Short-term rentals: an additional 6 months of PITIA reserves.
- Portfolio loans with vacant transactions: an additional 6 months of PITIA, 9 months in total. A portfolio loan is treated as vacant when 25% or more of the included properties are vacant — on purchases and on refinance/cash-out alike.
If you take the 10-year interest-only option, reserve requirements are based on the ITIA payment rather than the fully amortizing payment. That is a meaningful difference in dollars and it is stated in the interest-only section, not the reserves section.
This is the DSCR side of the reserve question. The commercial six-months standard for small-balance commercial loans is a different program with a different measure — see [how much cash reserves you need for a commercial loan](/blog/how-much-cash-reserves-do-you-need-for-a-commercial-loan) for that one. Do not mix the two.
What can meet reserves
Funds held in a checking, savings, money market, certificate of deposit or other depository account may be used for down payment, closing costs, and financial reserves. Eligible assets must be held in a US account. Retirement accounts are usable but discounted by a 30% haircut, and retirement accounts that do not allow for any type of withdrawal are ineligible for reserves entirely.
Cash-out proceeds may be utilized for reserves if FICO is greater than 700 — a refinance option, with a credit floor above the program minimum.
Eligible assets of all borrowers and guarantors may be combined, and should be verified at approximately the same time to prevent double counting. Liquid assets required for post-closing reserves will be evidenced and verified prior to funding, so this is not a one-time check at application.
The gift letter: exactly what it has to say
The gift must be evidenced by a signed letter. The program lists the required contents:
- The gift amount and the date funds were transferred.
- A statement that no repayment is expected.
- The donor's name, address, telephone number, and relationship to the Borrower.
- Specification of the date on which the funds were transferred.
Two of those four items are the transfer date, which tells you how much weight it carries. Write the actual date — not "on or about," and not the date of the letter if they differ.
Name the relationship in the guideline's own vocabulary — "mother," "brother-in-law," "step parent" — rather than "family friend of thirty years." An underwriter reading the letter is checking it against a list.
The transfer trail
The letter is a statement of intent. The trail is the proof.
The program requires verification that sufficient funds to cover the gift are either in the donor's account or have been transferred to the Borrower's account. That "either/or" is the most useful sentence in the section, and it is the basis for the timing advice further down: you can satisfy this before the money moves.
Around that requirement sits the ordinary asset documentation standard:
- Two most recent months of account statements from the borrower, guarantor, primary guarantor, or the borrowing entity, including inter vivos revocable trust assets.
- Asset verification must provide sixty days of account activity and include all items normally indicated on bank statements.
- Funds required for down payment and closing costs on purchases must be documented with the two most recent months of bank statements or a Verification of Deposit form (FNMA 1006) completed by the depository institution.
- Large deposits inconsistent with monthly deposit activity must be verified if using them for down payment, reserves, or closing costs. The source of funds for newly opened accounts or unusually large deposits to existing accounts must be explained and documented.
- Unverified funds are not acceptable. Funds or cash that have not been vested or seasoned, where the source cannot be verified, are ineligible.
A gift deposit is by definition a large deposit inconsistent with your normal activity, so it will be flagged. That is expected — the flag is answered by the gift letter plus the paper trail. What fails is a deposit with no explanation attached, because the fallback classification is unverified funds.
Keep the mechanics clean:
- Transfer by wire or check, from an account in the donor's name, to an account in your name at a US institution.
- Do not break the gift into several smaller deposits to avoid attention. Multiple unexplained deposits are worse than one explained deposit.
- Cash-on-hand is not permitted. A relative handing you an envelope creates a deposit with no verifiable source.
Timing: how to structure so the funds are never questioned
There is no gift-fund seasoning period stated in the program text — the guideline does not say a gift must sit for 30 or 60 days before it becomes yours. What the guideline does say is that the two-month statement window and the sixty days of account activity are what we look at. That gives you two clean approaches and one messy one.
Approach one — document the donor, transfer late. Get the gift letter signed and obtain a statement showing sufficient funds in the donor's account. That alone satisfies the verification requirement, and the money can move close to closing.
Approach two — transfer early, document the landing. Move the money into your account and provide the gift letter plus the deposit showing on your statement.
The messy one — transfer mid-underwriting with no letter yet. The deposit appears on an updated statement, nobody has papered it, and the file stalls while a letter and a donor statement are chased. Reserves are re-verified prior to funding anyway, so a late deposit does not slip by.
Where gifts get recharacterized: interested party contributions
If the money comes from someone with a stake in the transaction, it stops being a gift and becomes an interested party contribution. The rules are far tighter.
Interested party contributions include funds contributed by the property seller, builder, real estate agent or broker, mortgage lender or their affiliates, and any other party with an interest in the real estate transaction. The restrictions:
- May only be used for closing costs and prepaid expenses. May not be used for down payment or reserves.
- Maximum interested party contribution is limited to 3% of the purchase price.
Anything beyond those limits, or any amount not used for closing costs or prepaid expenses, is a seller concession. All seller concessions must be addressed in the sales contract, the appraisal, and the HUD-1 or CD. Where one is present, both the appraised value and the sales price are reduced by the concession amount for calculating LTV, CLTV and HCLTV — which shrinks your loan.
Transactions where the seller and borrower are related should be closely reviewed on an individual basis. That is the guideline's language, and it is deliberately not a bright line.
Gift of equity is not permitted
This is the natural next idea on a family purchase, so state it plainly: a gift of equity is not permitted on this program. A relative selling you a property below market and calling the discount your down payment does not work. Family sales and transfers are eligible non-arm's-length transactions, but the equity spread cannot substitute for cash.
The qualifying context around the gift
A gift solves a cash problem, not a credit or coverage problem. Minimum FICO on the DSCR program is 660 for all guarantors, and the middle score is used. At 660 eligibility is limited to 1 unit, with maximum LTV of 75% on purchase and rate/term to $1,500,000 and 65% at $2,000,000; higher scores open 1-4 units and more leverage. Underwriting is manual.
The down payment implied by those LTVs is the number the 50% cap applies to. A stronger credit profile changes the size of the gift you need before it changes anything about whether a gift is allowed.
What this page does not do
This page explains the gift-fund rules on The Fiirm's DSCR program for 1-4 unit investment property, as written in the V28 guidelines. It is not an approval, a commitment to lend, a quote, or a rate sheet. Underwriting is manual and a real file is decided on its own facts.
Specifically out of scope:
- Gift tax. Whether a gift is reportable, who reports it, and what it costs are questions for the donor's accountant or tax attorney. The lending guideline does not address tax treatment and neither do we.
- The donor's own source of funds. The program requires verification that funds sufficient to cover the gift sit in the donor's account or have been transferred to yours. It does not state a requirement to source and season the donor's balance beyond that, and we have not invented one.
- Gifts from trusts or entities. The relative list names individuals. The guideline is silent on a gift from a family trust or an LLC — raise it early rather than assuming a yes or a no.
- A stated seasoning period for gift funds. There is none in the program text. The two-month statement window and sixty days of activity are what get reviewed.
- Owner-occupied financing. This is an investor program.
- Pricing, rate locks, prepayment structures, and state-specific overlays, which live in separate sections and in the applicable state appendix.
- Legal, zoning, permitting and title questions, which belong with your attorney or the relevant municipality.
If part of your cash is coming from family, settle two things first: the reserve figure, and whether the donor will document. Everything else here follows from those answers.
Guideline DSCR V28 · Reviewed August 31, 2026
Published September 1, 2026 · Updated September 1, 2026
How to use this guide
This article is educational guidance, not an offer or commitment to lend. Rules, property facts, credit, leverage, documentation, and full underwriting still control any actual scenario.