Can You Use an Inheritance for a Down Payment in Massachusetts or New Hampshire?
The quick answer: Yes. You can use an inheritance for a down payment in Haverhill MA, Salem NH or anywhere else. Lenders accept it as long as you can show where it came from. Keep the money in one account, get the executor's letter, and talk to a lender before you start looking at homes.
It's never just the house. Sometimes it's a baby, a breakup, a parent, or a fresh start.
Picture this. The estate is finally settled. You're at the kitchen table in Haverhill MA, looking at a number your mom saved one paycheck at a time.
Part of you wants to turn it into a home she'd love. Part of you isn't ready to spend a dollar of it. Both feelings are normal. There's no deadline here.
You're also not alone. Nearly 1 in 4 Gen Z and millennial buyers used family money, from a gift or an inheritance, toward their down payment, according to a July 2025 Redfin survey (reported).
How you move that money, and how much you keep back, changes three things: your monthly payment, how smoothly your mortgage gets approved, and how the rest of the family feels about it.
The right down payment is the one that still lets you sleep at night.
In this guide
Can you use an inheritance for a down payment?
Yes. Lenders treat inherited money as a normal source for a down payment and closing costs.
They just need proof. Your lender has to see that the money is yours and that it isn't a loan. A big deposit right before you apply will get questions, so plan for that from the start.
What paperwork will your lender ask for?
Most lenders ask for some mix of these:
- A letter from the executor or trustee showing what was paid to you.
- A copy of the will, trust page or probate court paperwork naming you.
- The bank statement that shows the deposit.
- A statement showing the sale, if you inherited stocks or funds and cashed them out.
The simplest path: one deposit, one account, and leave it alone until closing.
Does it matter what kind of inheritance it is?
Yes. Here's how each one works:
- Cash: the easiest. Deposit it and keep the paper trail.
- Stocks or funds: sell what you need, then keep the sale statement and the deposit statement together.
- A traditional IRA or 401(k): money you take out of an inherited retirement account usually counts as taxable income. That can mean a tax bill next April. Ask a CPA how much to take out, and when.
- The house itself: that's its own decision, covered below.
CPA Ann M. McClain of 415 Group points out the step-up in basis skips retirement accounts, naming "401(k) or IRA plans." (Read her post)
Do you pay tax on an inheritance in Massachusetts or New Hampshire?
Usually not you, the person receiving it. Here's how the two states compare:
| Massachusetts | New Hampshire | |
|---|---|---|
| Estate tax. | Yes, only on the part over $2 million, paid by the estate. | None. |
| Inheritance tax on the person receiving it. | None. | None. |
| State gift tax. | None. | None. |
McLane, a law firm with offices in Woburn MA and Manchester NH, sums up the New Hampshire side: "New Hampshire imposes no state estate or gift tax." (Read the article)
On top of that, the federal estate tax only applies to estates over $15 million in 2026 (official IRS figure, reported by Morgan Lewis).
If you inherited a house or investments, ask a CPA about the "step-up in basis" before you sell anything. It can lower the tax you'd owe when you sell.
McLane's "Know the Law" column in the Union Leader says it simply: "Inheritance is generally not subject to state or federal income tax." The tax question is any growth in value after you inherit, and that's where the step-up helps. (Read the column)
How much of your inheritance should go into the house?
Here's a worked example. These numbers are only an example, not a rate quote.
The setup: a $650,000 home in Haverhill MA. You inherited $150,000. A 30-year loan at 6.25%.
| 20% down | 10% down | |
|---|---|---|
| Down payment. | $130,000. | $65,000. |
| Loan. | $520,000. | $585,000. |
| Principal and interest. | About $3,202 a month. | About $3,602 a month, plus mortgage insurance. |
| Left in the bank. | $20,000. | $85,000. |
The bottom line: 20% down saves about $400 a month before mortgage insurance. 10% down keeps $65,000 more in savings for a new roof, a job change or a parent who needs help.
Neither choice is wrong. Pick the payment you feel good about and the cushion that lets you rest. Taxes and insurance aren't included, so ask your lender for the full monthly number.
What if you inherited the house itself?
You've got three choices:
- Move in. Ask a CPA about taxes, and check that the homeowners insurance is in your name.
- Sell it. The step-up in basis can lower the tax on the sale.
- Buy out your siblings. Get an appraisal so the price is fair to everyone, then use a mortgage to pay them their share.
What if your siblings feel it's unfair?
This one surprises people. Your brother got the same amount and put it in the bank. You bought a house. Now every visit, he's walking into "Mom's house."
You can't control how anyone feels. You can be open about what you did and why. If a parent is still living and helping one sibling more than another, that's a bigger conversation. Part 2 of this series covers it.
Send this to a friend settling an estate: The money your parents left you can help you buy a home. How you move it decides how smooth that goes.
What am I seeing in our towns?
I sit at a lot of kitchen tables where the down payment came from someone who isn't here anymore. Those buyers don't just want a good deal. They want to feel like they honored the person who made it possible.
Here's my promise when you're buying: I make sure you don't overpay. The payment has to fit your life, not just your approval letter.
This series: Buying a house with your parents without a sibling fight and the best homes for living with aging parents in MA and NH.
What homes are for sale in Haverhill MA, Salem NH, Woburn MA and Manchester NH right now?
Here are the homes for sale right now, live from the MLS. The newest ones show first. Tap any home for photos and details.
Buying with an inheritance
Want to talk it through before you start looking?
Book a time and we'll map out the payment and the cushion that fit your life.
About Lisa Sevajian
Lisa Sevajian is a Realtor with the Lisa Sevajian Group at eXp Realty, licensed in Massachusetts and New Hampshire. She has guided almost 2,000 families through buying and selling and has ranked in the top 1.5% of over 1.4 million Realtors nationwide, verified by RealTrends. She serves the Andovers, the Merrimack Valley, Seacoast MA and NH, Southern NH and the North Shore. Buying, she makes sure you don't overpay. Selling, she makes sure you don't say yes to too little. Call Lisa Sevajian at 978-457-3406.
Home, for me, is here
This is home for me. I grew up north of Boston. I raised my two daughters here as a single mom while I built my business. When they were little, they hosted open houses with me.
Home was North Andover MA. I grew up in the library neighborhood on Mifflin Drive, later moved out to the country side of town, and loved every moment of my 40 or so years there. I hiked Weir Hill with my dogs, and a lot of my mornings started at Good Day Cafe.
So when you ask me about a town, you get more than numbers. Ask me about a school, a street or your commute, and you get someone who has lived it. If you're making a move here, you won't make it alone.
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Questions people ask
Can I use inheritance money for a down payment on a house in MA or NH?
Yes. Lenders accept inheritance money for a down payment and closing costs as long as you can show where it came from with estate paperwork and bank statements.
How long do I have to wait to use an inheritance for a mortgage in Massachusetts?
There isn't a set waiting period to use an inheritance for a mortgage. You'll need the executor's letter and the bank statement showing the deposit.
Do I need a gift letter for an inheritance?
Usually not. A gift letter is for money from a living person. An inheritance is shown with estate paperwork instead.
Do I pay taxes on an inheritance in Massachusetts?
The person receiving an inheritance in Massachusetts usually doesn't pay tax on it. Massachusetts has an estate tax that the estate pays, and only on the part over $2 million.
Does New Hampshire have an inheritance tax?
No. New Hampshire has no inheritance tax and no estate tax, so buyers in Salem NH or Windham NH using an inheritance won't owe a state tax on it.
Is an inherited IRA taxable if I use it for a down payment?
Usually, yes. Money taken out of an inherited traditional IRA or 401(k) generally counts as taxable income. Ask a CPA before you take it out.
Should I use my whole inheritance as a down payment in New Hampshire?
Most buyers shouldn't use their whole inheritance as a down payment. Keep a cushion for closing costs, moving and repairs. A lender can show you the payment at a few different amounts.
Is 20% down worth it on a home in Haverhill MA?
It can be. On a conventional loan, 20% down means no private mortgage insurance and a lower payment. On a $650,000 home in Haverhill MA, that's about $400 a month less than 10% down.
Can I use an inheritance to pay cash for a house?
Yes, you can pay cash for a house with an inheritance. Just make sure you still have savings left after closing.
What if I inherited a house with my siblings in Massachusetts?
You can keep it together, sell it, or one of you can buy the others out. An appraisal keeps the price fair, and an attorney can put the agreement in writing.
Can I share my inheritance with a sibling for their down payment?
Yes. Their lender will treat your money as a gift and ask you to sign a gift letter.
Will a large deposit hold up my mortgage?
A large deposit can slow down a mortgage if you can't show where it came from. Give your lender the executor's letter up front and it usually moves quickly.
Sources
- Mass.gov Department of Revenue: Estate tax, $2 million threshold.
- IRS: Tax inflation adjustments for tax year 2026, including the $15 million estate exemption and $19,000 gift exclusion.
- Redfin: Mortgage down payment gift rules, explained (July 2025 survey).
- Rocket Money: Using an inheritance to buy a house.
- SVB Private Bank: Massachusetts estate tax changes.
- McLane via Mondaq: Planning for the Massachusetts estate tax.
- McLane, Union Leader: With inherited homes, cost basis matters.
- 415 Group, Ann M. McClain CPA: The step-up in basis.
- Morgan Lewis: IRS 2026 gift and estate tax amounts.
This is general information, not legal, tax or lending advice. Check with your attorney, lender and CPA before you decide.
I'll guide you home.
Lisa Sevajian