Around a third of first-time buyers in the UK receive some form of financial help from family. The most common route is a gifted deposit — where a parent or close relative gives you money towards the purchase price. Every lender accepts them, but the rules and paperwork requirements vary more than most people expect.\n\nWhat Counts as a Gift — A gift is money given with no expectation of repayment. This is the critical distinction. If your parents lend you 30,000 and expect it back, that is not a gift — it is a loan, and lenders treat it completely differently. A loan from family counts as a debt commitment, reduces your borrowing capacity, and some lenders will decline the application outright. The money must genuinely be a gift with no strings attached.\n\nThe Gifted Deposit Letter — Every lender requires a signed letter from the person giving the gift. The letter must confirm the donor's full name and address, the amount being gifted, the relationship to the buyer, that the money is a gift and not a loan, that the donor has no interest in or charge over the property, and that no repayment is expected. Most solicitors and brokers have template letters. Some lenders provide their own forms that must be used.\n\nSource of Funds — Anti-money laundering regulations mean your solicitor must verify where the gift money came from. The donor will need to provide bank statements showing the funds (typically three to six months), evidence of where the money originated (savings, sale of property, pension lump sum, inheritance), and photo ID and proof of address. This applies even to parents. It is not optional and your solicitor can refuse to act if the source cannot be verified. Start gathering these documents early — it is one of the most common causes of delay in the conveyancing process.\n\nWho Can Give a Gift — Most lenders accept gifts from parents, grandparents, siblings, aunts, uncles, and sometimes close family friends. The key requirement is that the donor must not be purchasing the property or have any financial interest in it. Gifts from non-family members are treated with more scrutiny. Some lenders will not accept gifts from friends at all. Others require the friend to provide additional declarations. If the gift is from a partner you are not buying with, some lenders classify this differently — always check.\n\nCan You Use a Gift for the Entire Deposit — Yes, most lenders accept a 100% gifted deposit. However, some require the buyer to contribute at least 5% from their own savings. Lenders who accept full gifted deposits include Barclays, Halifax, Nationwide, NatWest, HSBC, and most building societies. A few specialist lenders require some personal contribution as evidence of financial discipline.\n\nTax Implications of Gifted Deposits — There is no income tax or capital gains tax on receiving a gift in the UK. However, gifts may have inheritance tax implications for the donor. If the person giving the gift dies within seven years, the gift may be counted as part of their estate for IHT purposes. The annual gift allowance is 3,000 pounds per person. Gifts above this use the seven-year taper relief rule. For most families this is not an issue, but for larger gifts from elderly or unwell relatives, it is worth considering. The donor should keep records of the gift for their own estate planning.\n\nGifted Equity — A variation on gifted deposits is gifted equity, where a family member sells you their property below market value. If your parents own a house worth 300,000 and sell it to you for 240,000, you have 60,000 of gifted equity — a 20% deposit without anyone transferring cash. Most mainstream lenders accept gifted equity. The property will need a formal valuation and the lender lends based on the market value, not the sale price. Stamp duty is calculated on the market value when the sale is between connected persons, so there is no stamp duty saving — but you avoid the need to come up with a cash deposit.\n\nCommon Mistakes — Depositing the gift too early or too late. Ideally, the gift lands in your account two to four weeks before the mortgage application. If it arrives the day before, lenders may not accept it. If it arrived twelve months ago and has been mixed with other funds, tracing becomes harder. Do not move the money through multiple accounts before it reaches you — this creates a paper trail nightmare for your solicitor. And never describe the money as a loan in any communication, even casually in a text message to your parents. Underwriters read correspondence literally.