By Hans Fetterhoff, Mortgage Broker, NMLS# 273273
Yes — in Colorado Springs, a parent or other eligible donor can give you money for your down payment, and on a one-unit home you will live in, that gift can cover the entire down payment on a conventional or FHA loan. What makes it work is not the amount. It is the documentation: a signed gift letter saying no repayment is expected, plus a paper trail showing the money moved from the donor's account to you or to closing.
This is one of the most common — and most misunderstood — ways first-time buyers here close the gap. The money itself is rarely the problem. The problems are predictable: a well-meaning parent wires cash the week before closing with no records, a gift letter is missing one line, or a large deposit lands in your account and nobody can prove where it came from. Every one of those is fixable if you plan it before the money moves, and painful if you try to rebuild it after. If you are still mapping out your whole purchase, our first-time buyer guide for Colorado Springs covers where gift money fits in the bigger picture.
Yes, and parents are the classic case every loan program is built around. At the Pikes Peak Association of REALTORS median sale price of $479,000 in September 2026, the minimum down payment is $14,370 at 3% down on a conventional loan or $16,765 at 3.5% down on an FHA loan — amounts a family gift can cover in full on a one-unit primary residence, when the gift is documented correctly (PPAR, September 2026, published October 2026).
Three conditions have to be true for any program:
One more local wrinkle worth knowing up front: if you are pairing a family gift with Colorado assistance, the programs treat gifts differently. CHFA requires a $1,000 minimum financial contribution from the borrower, and that $1,000 may be a gift (CHFA program matrix, effective August 3, 2026). CHAC, by contrast, requires its borrower minimum — 1% of the sales price — from your own funds; it cannot be a gift ($750 for borrowers with disabilities). Same family check, two different answers depending on the program, which is why we sort this out at pre-approval and not at the closing table. Our CHFA loans page for Colorado Springs lays out the CHFA side in full.
The donor rules are set by the loan program, not by Colorado law, and no program allows a gift from someone with a financial interest in the sale — the seller, the builder, the real estate agent, or anyone who will be reimbursed by them.
| Loan type | Who can give | Can the gift cover the whole minimum down payment? |
|---|---|---|
| Conventional (Fannie Mae) | A relative by blood, marriage, adoption, or legal guardianship; a domestic partner; a fiance or fiancee; a former relative; or someone with a long-standing family-like or mentorship relationship | Yes, on a one-unit primary residence, at any loan-to-value. Above 80% loan-to-value on a two- to four-unit primary residence or a second home, you must first contribute 5% from your own funds. Gifts are not allowed on an investment property. |
| FHA | A family member; your employer or labor union; a close friend with a clearly defined and documented interest in you; a charitable organization; or a government agency or public entity running a homeownership program for low- or moderate-income or first-time buyers | Yes. The entire 3.5% minimum required investment at a credit score of 580 or higher can be gifted. |
| VA | A donor who has no affiliation with the builder, developer, real estate agent, or another interested party to the transaction | VA loans generally require no down payment, so a gift most often covers closing costs or a voluntary down payment. Gift funds cannot be counted toward any cash reserves the file requires — reserves have to be your own money. |
Sources: Fannie Mae Selling Guide B3-4.3-04, Personal Gifts; HUD Handbook 4000.1, Gifts (Personal and Equity); VA Pamphlet 26-7, Chapter 4, Gift Funds. Individual lenders can add stricter overlays on top of these program floors, so confirm your donor with your lender before any money moves. The program pages for conventional loans in Colorado Springs, FHA loans, and VA loans in Colorado Springs walk through how each program works here locally.
Notice what this means in practice for Colorado Springs families: a grandparent, a step-parent, and — on an FHA loan — even a documented close friend or an employer can all be legitimate donors. A gift from your listing agent or your builder cannot, no matter how generous the intent.
A gift letter is a short, signed statement from the donor that turns "Mom sent me money" into a document an underwriter can approve. Every major program asks for the same core items:
Most lenders will hand you their own gift letter form. Use theirs, not a template pulled from the internet — the form in your loan file is built to satisfy your specific program, and a letter that matches it exactly saves a round of underwriting conditions later. Fill in every line. A missing phone number or an amount that does not match the transfer record is the most common reason a perfectly good gift gets kicked back for corrections.
A practical tip from real files: if the gift amount changes — even slightly — tell your lender before closing. The letter, the transfer record, and the amount in your account all have to agree.
The letter alone is never enough. The lender must also document that the money actually moved, from an eligible donor's account, to you or to the closing agent. Depending on the program and how the gift is transferred, that documentation typically includes one of these paths:
Why so much paper for a family gift? Because a large, unexplained deposit looks, to an underwriter, exactly like an undisclosed loan — and an undisclosed loan changes whether you qualify. Fannie Mae treats a single deposit that exceeds 50% of your total monthly qualifying income as a large deposit that must be sourced when it is used for the down payment, closing costs, or reserves; anything the lender cannot source does not count toward your verified funds. A $15,000 gift will clear that threshold for most buyers, which is normal and expected — as long as the letter and the transfer records are in the file.
Three habits keep this painless:
And a timing note buyers ask about often: money that has simply sat in your account for a long, documented history raises fewer questions than money that arrived last week. That is not a reason to delay a gift — it is a reason to tell your lender a gift is coming at pre-approval, so the documentation plan is set before the first statement is ever pulled.
Usually not in the way families fear, but this part belongs to the donor and to a tax professional — treat what follows as general information from the IRS, not tax advice for your family.
For 2026, the IRS annual gift tax exclusion is $19,000 per donor, per recipient (IRS, "What's New — Estate and Gift Tax," and Revenue Procedure 2025-32). That means one parent can give you up to $19,000 in 2026 with no gift tax return required for that gift, and two parents giving separately can give up to $38,000 to one recipient — or up to $76,000 to a married couple, with each parent giving to each spouse.
A gift above the annual exclusion does not automatically mean tax is owed. It generally means the donor files Form 709 and counts the excess against the donor's lifetime gift and estate tax exclusion, which the IRS lists at $15,000,000 for 2026. And the person receiving a gift does not owe income tax on it — any gift tax responsibility belongs to the donor. Families planning a larger gift should talk to their own CPA or tax advisor before the money moves, especially if gifts will be split across calendar years on purpose.
Do not let tax worries quietly kill a workable plan: for the typical Colorado Springs down payment gift at the sizes in the worked example above, most families are dealing with a filing question at most, not a tax bill.
Local takeaway: In El Paso County, family help is a normal, program-approved way to buy — CHFA will even let a gift cover its $1,000 minimum contribution. What separates the gifts that sail through underwriting from the ones that delay a Colorado Springs closing is never generosity. It is three pieces of paper, lined up early: an eligible donor, a complete gift letter, and a traceable transfer. Get those right and the gift does exactly what your family intended — it gets you home sooner.
Is family helping with your down payment, or are you the parent hoping to help your kid buy here in Colorado Springs? Call Broker House Mortgage at (719) 686-3652 or start your application online before any money moves, and we will map the letter and the paper trail to your loan type so the gift counts the first time.
Broker House Mortgage, 529 N Tejon St, Colorado Springs, CO 80903, (719) 686-3652.
Hans Fetterhoff | Mortgage Broker | CO License #100009597 | NMLS# 273273
Lender Works, LLP dba Broker House Mortgage | Company NMLS# 2002619
529 N Tejon St, Colorado Springs, CO 80903 | 719-686-3652 | brokerhousemortgage.com
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