Coming up with a down payment can feel like quite a hurdle.

For millennials, who are currently the largest cohort of homebuyers, getting help with the down payment is fairly common — roughly 29% of younger millennials receive gift money from a loved one.

Are you considering using gift funds during your homebuying journey? It’s important to understand the rules surrounding this strategy when applying for a mortgage.

Here’s what you need to know:

Q: How much can you get?
A: This depends on your mortgage program: With FHA loans, for example, the entire down payment can be funded via gift money. Conventional loans will only allow this if you put down 20% or more.

Q: Who can offer gift money?
A: Again, this depends on the loan type. A conventional loan only allows for family gifts, while others may let you use gift money from friends, employers, down payment assistance programs and more.

Q: How should it be documented?
A: If you’re using gift money for your down payment, your lender will require a letter from the gift-giver which states that you, the recipient, do not need to repay the funds. If you do repay the money later, it could be considered mortgage fraud.

You may also need a copy of the check or wire transfer from the gift-giver, your deposit slip and the withdrawal slip showing them taking the funds from their bank account. You might be asked to share a copy of your bank statement (showing when and how much was deposited), too.

Do you need help finding a home — and a trusted lender? Reach out for more guidance.