Many first-time buyers get onto the ladder with help from family in the form of a gifted deposit. It is a common and accepted route, but lenders have rules about it. This guide explains gifted deposits: what they are, who can give one, the paperwork involved, and the checks lenders make.
What a gifted deposit is
A gifted deposit is money given to you, usually by family, to put towards your deposit, with no expectation of repayment. It can dramatically shorten the time it takes to buy, or increase the deposit you can put down, unlocking better rates. Gifted deposits are common and accepted by most lenders, provided certain conditions are met and the gift is genuine, as explained below.
Who can give a gifted deposit
Most lenders prefer gifted deposits to come from close family, such as parents or grandparents, though some accept gifts from wider family or others. Each lender has its own rules about who can give a gift, so if your help is coming from a less typical source, it is worth checking which lenders will accept it. A broker can help identify lenders comfortable with your particular situation.
It must be a genuine gift
A key requirement is that the money is a genuine gift, not a loan, and that the person giving it has no stake or interest in the property. Lenders want to be sure the gift does not have to be repaid and does not give the giver a claim on the home, because that would affect the lender's security. This distinction between a gift and a loan is central to how lenders treat the money.
The gifted deposit letter
Lenders usually require a gifted deposit letter from the person giving the money, confirming that it is a gift, that it does not need to be repaid, and that they have no interest in the property. This letter is a standard part of the process, and your lender or solicitor will tell you what it must contain. Having it ready promptly helps keep your purchase moving smoothly through the legal and mortgage stages.
Source of funds checks
Lenders and solicitors must carry out anti-money-laundering checks, which include verifying the source of your deposit, including any gift. The person giving the gift may be asked to show where the money came from, such as savings or the sale of an asset. These checks are routine and required by law, so being ready to provide evidence of the source of the funds avoids delays at a crucial stage.
Tax considerations
Gifting money can have tax implications for the giver, particularly around inheritance tax, where gifts may be considered if the giver dies within a certain period. The rules can be complex, and this is an area where proper advice is valuable. While a gifted deposit itself is straightforward for the buyer, the person giving a large gift may wish to take tax advice, as this guide is general information rather than tax advice.
Combining a gift with your own savings
A gifted deposit can be combined with your own savings and other help, such as a Lifetime ISA, to build a larger deposit. Many first-time buyers use a mix, as our guide to saving a deposit faster explains. Combining sources can lift you into a lower loan-to-value band, unlocking better rates, as our guide to how much deposit you need shows.
How much can be gifted?
There is no legal limit on how much someone can give you towards a deposit; the gift can be part or even all of it, depending on the giver's means and the lender's rules. Some lenders are happy with a fully gifted deposit, while others prefer you to contribute some of your own savings. If your deposit is entirely a gift, it is worth checking which lenders accept that.
Gifts from different family members
Lenders are generally most comfortable with gifts from close family, such as parents and grandparents. Gifts from more distant relatives or non-family may be accepted by fewer lenders, or come with extra checks. If your help is coming from someone less typical, a broker can identify lenders who will accept it, so the source of your gift does not narrow your choices more than necessary.
If the giver wants some protection
Sometimes the person gifting wants some protection, for example if they are giving to one person in a couple. While a gifted deposit must be a genuine gift with no stake in the property for mortgage purposes, families can consider other arrangements, with legal advice, to reflect their wishes. It is important not to disguise a loan as a gift, so any protections must be handled properly and transparently.
Gifted deposits and joint purchases
When buying with a partner, a gift to one of you can still form part of the shared deposit, but it is worth being clear about whose money it is, especially if you are not married. Recording contributions in a declaration of trust, as our guide to buying with someone else explains, ensures a gift to one person is recognised if you later sell or separate.
Timing and records
It helps to have the gift in place in good time, so the money is available and the source can be evidenced when needed. Keep records of where the money came from and the gifted deposit letter, as lenders and solicitors will ask. Organising the gift early, rather than at the last minute, avoids delays at completion and keeps your purchase running smoothly through its final stages.
A gift can transform your timeline
For buyers fortunate enough to receive one, a gifted deposit can transform the timeline of getting onto the ladder, turning years of saving into a purchase that is possible now. Combined with your own savings and any schemes, it can lift you into a better loan-to-value band and a lower rate. The key is handling it properly: a genuine gift, the right paperwork, and clear records of where the money came from.
Be clear it is a gift, not a loan
The single most important point is that the money must genuinely be a gift, not a loan in disguise. Lenders require this because a loan would be a further claim on your finances and the property. If family actually intend the money to be repaid, that is a different arrangement with different implications, and it should be handled honestly rather than presented as a gift, which protects everyone involved.
Handled properly, with the right letter, honest records and an understanding of any tax implications for the giver, a gifted deposit is a straightforward and widely accepted way for family to help you buy, and often the single biggest boost a first-time buyer can receive.
In short
A gifted deposit is money given, usually by close family, to help with your deposit, with no expectation of repayment. It must be a genuine gift, with the giver having no stake in the property, confirmed by a gifted deposit letter. Lenders and solicitors check the source of the funds. There can be tax considerations for the giver. Combined with your own savings, a gift can be a powerful boost.
Where to get help and next steps
Read our guides to how much deposit you need, saving a deposit faster, and buying with someone else. This is general information, not tax, mortgage or financial advice.