Gifted deposit mortgage guide

Gifted deposit mortgages: what they are and how lenders assess them

A gifted deposit is money given to you as a gift to help you buy a home. It’s often provided by family members, but it can also come from close friends.

The key point is that a gifted deposit is not a loan. When it’s correctly documented, it can support your mortgage application by increasing the deposit you’re putting in, which may help your loan-to-value (LTV) position.

What counts as a gifted deposit?

In most cases, a gifted deposit is a transfer of funds from the donor’s account or savings to the buyer’s account. The money is then used as part of your property purchase deposit.

Because lenders need to understand the nature of the funds, you’ll usually be asked to show that:

the money came from the donor (with a clear paper trail)
it is a gift, not money you must repay
there’s no expectation of repayment or repayment obligation

How a gifted deposit can help your mortgage application

A gifted deposit can strengthen your application mainly through the impact on your deposit and LTV.

1) It can improve your LTV position

By increasing the amount you have available to put towards the purchase, you may move into a more favourable LTV band. LTV is a core factor lenders use when assessing risk.

2) It can support the lender’s view of risk

While affordability is assessed based on your income and outgoings, lenders also look at your overall financial picture. A clearly evidenced deposit gift (with no repayment obligation) helps lenders treat the funds as a genuine contribution rather than additional debt.

3) It may make your application more straightforward

Where a deposit gift is properly documented, it can reduce uncertainty for the lender’s underwriting process.

Who can gift a deposit?

Gifted deposits commonly come from close family members such as parents or grandparents. In practice, lenders may also consider gifts from siblings, other relatives, or close friends—though the level of scrutiny can vary.

A useful way to think about it is: the closer the relationship and the clearer the evidence, the easier it tends to be to evidence the gift.

Typical sources of gifted deposits

Gifter	How it’s usually viewed	Notes lenders may look for
Parents	Common and often straightforward	Clear bank transfer evidence and a signed gift declaration
Grandparents	Often accepted	Evidence of funds and a clear gift letter
Siblings	Possible	Documentation must clearly show it’s a gift, not a loan
Extended family	Sometimes accepted	May require extra explanation and stronger evidence
Close friends	Sometimes considered	Lenders often expect a detailed paper trail and clear relationship context
Non-family members	More limited	Often the most heavily scrutinised

What evidence do lenders typically require?

Lenders need to verify that the gifted deposit is genuine and that it does not create a repayment obligation.

While requirements can vary by lender and case, the most common forms of evidence include:

bank statement(s) showing the transfer from the donor to you
a gifted deposit letter (a signed declaration from the donor)
identification documents for the donor in some cases, particularly where the lender needs to verify identity and the source of funds

Practical tip: keep the money trail clean

Most issues arise when the source of the funds is unclear or when the transfer history is difficult to evidence. Using a traceable bank transfer and ensuring the amounts match your application figures can help avoid delays.

What should a gifted deposit letter include?

A gifted deposit letter is the document that confirms the donor’s intention and supports the lender’s underwriting.

A lender will typically expect the letter to include:

the donor’s full name
the buyer’s full name
the relationship between donor and buyer
the amount being gifted
confirmation that the funds are a gift and do not need to be repaid
the date of the gift
the donor’s signature

Some lenders may also expect the letter to reference the property purchase context (for example, that the gift is towards the deposit for the mortgage application). If you’re unsure what your lender expects, speak to your mortgage adviser so the documentation matches the lender’s process.

Are there tax rules for gifted deposits in the UK?

In most situations, the recipient does not pay tax on a gifted deposit.

However, the donor’s position can be relevant. For example, inheritance tax rules may apply in certain circumstances if the donor dies within a specified period after making the gift. There is also an annual allowance for gifts.

Because tax treatment can depend on individual circumstances, it’s sensible to consider professional tax guidance if the gift is substantial.

Alternatives to a gifted deposit

If family help isn’t available—or if you want to reduce reliance on a deposit gift—there are other ways buyers sometimes improve their mortgage position.

Common alternatives

Alternative	How it works	Key considerations
Guarantor mortgage	Another person provides security so the lender can take less risk	The guarantor may be liable for repayments if you can’t pay
Shared ownership	You buy a share of a property and pay rent on the remainder	Leasehold arrangements, rent and potential service charges
Lifetime ISA (LISA)	A savings account with a government bonus for a first home	Rules and withdrawal conditions apply
Family offset mortgage	Family savings are linked to the mortgage to reduce interest	Savings may be tied up and may not earn interest in the usual way
Joint mortgage	Two borrowers apply together	Both borrowers are responsible for repayments
First Homes scheme (England)	Discounted new-build homes for eligible buyers	Eligibility and availability depend on the scheme and property

Frequently asked questions

Do lenders accept gifted deposits?

Many lenders accept gifted deposits, particularly when the gift comes from close family members and is supported by clear documentation. Each lender has its own requirements, so the evidence you provide matters.

Is there a maximum amount for a gifted deposit?

There isn’t a single universal legal limit. Lenders consider the overall application, including income, property value, and risk. Very large gifts may require additional scrutiny.

Do I have to declare a gifted deposit to my mortgage lender?

Yes. If you receive money as a gift for your deposit, it should be declared to your lender as part of the mortgage application. Lenders typically require confirmation that the funds are a gift and not a loan.

Will a gifted deposit affect my mortgage application?

It can. A gifted deposit increases your deposit contribution, which may improve your LTV position and support the lender’s assessment of risk—provided it’s properly evidenced.

Can a gifted deposit come from someone other than family?

It can, but it may be more difficult to evidence. Lenders may ask for additional documentation and explanation to confirm the nature of the gift and the source of funds.

Does a gifted deposit affect credit checks?

The gifted deposit itself isn’t usually a credit factor. However, how the gift is documented and whether it is correctly declared can affect whether the lender can progress your application.

Summary

A gifted deposit can be a practical way to bridge the gap between what you’ve saved and the deposit required by a mortgage lender. The main success factor is documentation: a clear bank transfer trail and a properly completed gifted deposit letter help lenders confirm the funds are genuinely a gift and not a loan. If family support isn’t available, there are also other options that can help buyers improve their mortgage position.