Can My Parents Help Me Buy My First Home in California?

Family help usually takes one of two forms:

• A gift of money toward your down payment, closing costs, or both.
• Co-borrowing or co-signing, where a parent signs the loan with you so the lender counts their income and credit.

I'm Jeanette Nelson, a REALTOR® with Jeanette Nelson Real Estate, Keller Williams Realty, serving Orange County, Huntington Beach, Costa Mesa, Fountain Valley, and surrounding areas. When a family wants to help a son or daughter buy their first home, I bring the buyer, the parents and the lender into the same conversation early, so the help is set up the way the loan needs it.

Often, yes. Fannie Mae's Selling Guide, which many conventional lenders follow, allows gift funds to cover all or part of the down payment, closing costs, or reserves.

Fannie Mae accepts gifts from a relative, meaning anyone related to you by blood, marriage, adoption, or legal guardianship. A donor can't be connected to the builder, the real estate agent, or another party with an interest in the sale.

For a one-unit home you will live in, Fannie Mae's guide does not require a minimum contribution from your own funds. Gifts are not allowed for investment properties.

Other loan types may have their own gift rules, and each lender can add its own requirements. Ask your lender which rules apply to your loan before your parents transfer anything.

A gift letter is a signed statement from the person giving the money. Under Fannie Mae's guide, the donor signs a letter that:

1. States the dollar amount of the gift, or the maximum amount.
2. Says the donor does not expect to be repaid.
3. Lists the donor's name, address, phone number, and relationship to you.

The "no repayment" part matters. If the money is really a loan your parents expect back, it isn't a gift, and your lender needs to know. Your lender will also want records showing how the money moved to you.

A co-signer or co-borrower can help you qualify when your own income or credit isn't quite there yet. The Consumer Financial Protection Bureau (CFPB) is clear about what that means for your parent:

• They agree to take full responsibility for paying back the loan with you.
• They are obligated to cover missed payments, and even the full loan amount, if you don't pay.
• Their credit and finances are at risk if the loan isn't repaid.

The CFPB also notes that some loan programs treat a co-signer as someone who is not on title and has no ownership in the home. Whether your parent is on title is a separate decision with its own legal and tax effects. Ask your lender how they treat co-borrowers, and talk with an attorney or CPA about how title should be held.

Yes. Under Fannie Mae's guide, gift funds can go toward closing costs, not only the down payment.

The first real look at your closing costs comes from your Loan Estimate. The CFPB says your lender must provide it within three business days of receiving your application. For a line-by-line look at those costs, see What Will I Pay at Closing as a First-Time Buyer.

This is a question for a CPA, and I always send families there. A few general points from the IRS:

• The IRS lists the annual gift tax exclusion at $19,000 per recipient for 2025 and 2026. A married couple giving together can give $38,000 per recipient.
• The IRS says the donor, not the person receiving the gift, is generally responsible for any gift tax.

Your parents' CPA can look at their full picture and tell them what applies.

1. Talk to your lender first. Ask which gift rules apply and what paperwork they need.
2. Decide gift or co-sign. They carry different risks for your parents.
3. Keep every record. Gift letter, bank statements, and transfer receipts.
4. Bring in a CPA and, if needed, an attorney for gift tax and title questions.

For next steps, see Can I Afford My First Home in Huntington Beach and How Long Does It Take to Buy a Home in Orange County.

If your family wants to help and you're not sure where to start, I'd love to sit down with you, and your parents if they'd like, and map it out with your lender. Call or text me at 714.366.8575 | DRE: 01397168, or contact me. Jeanette Nelson is a REALTOR® with Jeanette Nelson Real Estate, Keller Williams Realty, serving Orange County, Huntington Beach, Costa Mesa, Fountain Valley, and surrounding areas.