You can definitely qualify for a conventional mortgage if you use a gift for the entire down payment on a home regardless of the down payment amount -- be it 3% or 20%. In fact, many borrowers who receive down payment gifts also use conventional mortgages and there is nothing in conventional loan guidelines that prevent you from using a gift to help you buy a home. We provide a comprehensive overview of the down payment required to buy a home, including how to use a down payment gift.
While using a down payment gift is certainly allowed if you are a first-time home buyer or if you intend to occupy the property you are buying as your primary residence, if you own other properties or are using a down payment gift to buy a rental property this may create a challenge with some lenders. Lenders prefer that borrowers hold a financial stake or equity in the property they buy, especially if you are buying an investment property or second home. If all of your down payment comes from a gift then you are not making a personal financial contribution toward the property purchase which may raise a red flag with some but not all lenders.
So while in most cases, the answer to your question is yes, property type and purpose also are important factors to consider. If want to use a down payment gift to buy a rental property it may be more challenging to find lenders that approve you for a conventional mortgage. You can use our FREEandCLEAR Lender Directory to search for lenders by state, lender type and loan program. For example, you can search credit unions in your state as they may offer more flexible qualification guidelines on this point.
I also recommend that you contact multiple lenders to understand how they would handle your unique situation. We advise you to contact at least five lenders as qualification guidelines vary and lenders may have different down payment gift policies.