Down Payment Gift from Employer 2026: Agency Rules, Tax Treatment, and EAH Programs

Employer-assisted housing (EAH) programs are employer-sponsored benefits that help employees with down payments, closing costs, or mortgage principal reduction. Large employers including hospitals, universities, and government agencies operate these programs to support employee retention near high-cost workplaces. MLOs working in markets near major employers should know these programs exist and how to document them correctly.

Fannie Mae and FHA Gift Fund Rules

Fannie Mae allows employer gifts as an acceptable source of down payment funds as long as the gift is not expected to be repaid. The lender must obtain a gift letter from the employer confirming: the amount, the property address, the donor's relationship to the borrower, and that no repayment is expected. FHA has the same documentation requirement and additionally allows employer grants (not loans) as an acceptable source without a gift letter if provided as a cash advance or benefit.

• ✦Fannie Mae: employer gift is acceptable, gift letter required, no repayment relationship
• ✦FHA: employer grant acceptable as gift fund source, IRS Form evidence of benefit may substitute for gift letter
• ✦Employer forgivable loans: acceptable only as a subordinate lien if the forgiveness schedule is documented and the lender approves subordinate financing
• ✦Employer second mortgage: must meet CLTV requirements and be subordinated behind the first

Tax Treatment for Employees

Down payment gifts from employers are considered taxable compensation unless they qualify as an excluded employer-provided benefit under IRS rules. Amounts above the annual gift exclusion that do not qualify as a business necessity are typically reportable as W-2 income. The loan officer should flag this to the borrower's CPA, as an unexpected W-2 inclusion can affect the following year's tax return and potentially the borrower's income qualification.

Finding EAH Programs Near You

Many large employers do not advertise EAH programs prominently. HR departments are the primary source. Hospitals operating near urban housing crises often have specific programs for nurses and clinical staff. University systems in the same markets offer similar programs for faculty. Contact employer HR directly and ask for the housing benefit administrator.