Luther started with the premise that we are justified by God's grace, received from God by faith -- but what is faith. The Swedish Lutheran historian Bengt Hagglund suggested that the Reformation doctrine of faith was very different from that espoused by the scholastics. The Scholastic writers thought of faith as a level of reason acquired through instruction and preaching. They distinguished this from infused faith which was a gift and involved full adherence to revealed truth. Luther rejected this distinction and defined faith not only as intellectual adherence to truth but also as "an actual fellowship with God, in which man places all of his trust in God and looks to Him as the source of all good. Faith for Luther was complete trust in God's mercy. [Hagglund, History of Theology, Concordia, 1987, pp. 226-227]
As a result, Luther, understood justifying faith to be the acceptance of Christ's substitutionary death on the cross as the foundation for reconciliation with God. Faith in the end is the work of God:
"Faith, however, is a divine work in us. It changes us and makes us to be born anew of God (John 1)); it kills the old Adam and makes altogether different men, in heart and spirit and mind and powers, and it brings with it the Holy Ghost. O, it is a living, busy, active, mighty thing, this faith; and so it is impossible for it not to do good works incessantly. It does not ask whether there are good works to do, but before the question rises; it has already done them, and is always at the doing of them. He who does not these works is a faithless man. He gropes and looks about after faith and good works, and knows neither what faith is nor what good works are, though he talks and talks, with many words, about faith and good works." [Luther, "Preface to Romans," in Works of Martin Luther, Philadelphia Edition, 6 vols., (Baker Book House, 1982), 6:451-52].
Though justification comes through faith, Luther made it clear that faith was not a virtue, that is being in the same vein as hope and love, but the receptive organ by which one receives God's gift of grace. Faith in essence is an acceptance of the fact that God has already accepted us on the basis of the cross.