Free Gift Letter for Mortgage Template

Prove that money you are gifted by a relative for the purchase of property does not need to be repaid with a Gift Letter for a Mortgage.

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Last Update July 18th, 2024

Also Known As

Mortgage Gift Letter


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What Is a Gift Letter for a Mortgage?

A Gift Letter for a Mortgage is an affidavit that acknowledges money was given to a buyer by a relative for a down payment or other property-related expenses.

The Gift Letter for a Mortgage verifies that the funds gifted are not a loan, and that the donor does not expect repayment.

The definition of a relative can vary depending on the type of loan being taken out, but usually refers to:

  • Children
  • Spouses
  • Parents
  • Grandparents or great-grandparents
  • Siblings
  • Aunts or uncles
  • Domestic partners

Sample Gift Letter for a Mortgage

There is no set way to write a Mortgage Gift Letter. Standards and regulations may vary by jurisdiction. Below is an example of a typical Gift Letter for a Mortgage template.

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gift letter for mortgage sample

When To Use a Gift Letter for a Mortgage?

A Gift Letter for a Mortgage is used anytime gifted funds are part of the home-buying process.

Lenders require this letter as a guarantee that the gifted money does not need to be repaid to the donor, and thus will not affect the borrower’s ability to repay the mortgage.

The letter confirms the gift is unconditional and that there are no conflicts of interest involved. This helps maintain transparency and supports the borrower’s financial stability in the eyes of the lender.

Gift Letter Regulations

Gift Letter regulations vary based on the type of property being purchased. If it will be your primary residence and a single family unit, your entire down payment can be gifted.

However, other types of property have different regulations, which can vary by lender. Some of the common regulations you should be aware of include:

What To Include in a Mortgage Gift Letter?

When you’re drafting a Mortgage Gift Letter, it is essential to include specific information to ensure the document meets legal and lender requirements. Here are the key elements to include:

  • Donor Information
  • Recipient Information
  • Gift Details
  • Signatures

Including these elements ensures that the gift letter is comprehensive and acceptable to lenders, which will facilitate a smoother mortgage approval process.

How To Write a Gift Letter for a Mortgage

Writing a Gift Letter for a Mortgage involves several important steps to ensure it meets lender requirements and legal standards. Follow these steps to help you write your letter:

Include donor information: Begin by including the donor's full name, address, and contact details. gift letter for mortgage contact details Add recipient information: Provide the recipient's full name and their relationship to the donor. add recipient information Explain the gift in detail: Specify the exact amount of the gift and the date of the transfer. Additionally, disclose the source of the funds, including the institution name and account details if necessary. gift letter for mortgage explin gift Include donor affirmations: The donor must affirm that the funds are a genuine gift with no expectation of repayment, no conditions attached, and no conflicts of interest. gift letter for mortgage donor affirmations Validate the gift letter: The Gift Letter must be signed by both the donor and recipient to be considered valid. gift letter for mortgage validate gift letter Attach Supporting Documents: Provide any necessary documentation, such as bank statements or transfer receipts, to substantiate the gift and its source.

Use our Gift Letter for a Mortgage template as a reliable foundation to help you during the writing process.

If you have any doubts or want to ensure your gift letter meets legal requirements, it is recommended to consult with a legal professional or financial advisor.

Gift Letters and Taxes

Both the donor and recipient must consider the possible tax implications of Gift Letters.

The annual exclusion for gifts is $18,000 per person. This means a donor can give up to $18,000 to a recipient without having to report the gift to the IRS.

If a gift exceeds $18,000, the donor must file IRS Form 709 (United States Gift (and Generation-Skipping Transfer) Tax Return). This form documents the gift and applies it against the donor's lifetime exemption.

The donor won't owe taxes if their total lifetime gifts are below the lifetime exemption, which is over 12 million dollars.

Generally, the recipient of a gift does not owe taxes on the amount received.

Both parties need to ensure all necessary documentation is completed to avoid any potential issues.

Other Financial Documents

There are several other real estate documents that may interest you if you are drafting a Gift Letter for a Mortgage. These include:

Mortgage Letter FAQs

Drafting your Gift Letter for a Mortgage can be a confusing process for both donors and recipients. Below are the answers to some of the most frequently asked questions regarding the process.

How to Get a Gift Letter for a Mortgage?

If you want to draft a Gift Letter for a Mortgage but don’t know where to begin, a Gift Letter for a Mortgage template can be found on this page. You can use this template as a reliable foundation for your Mortgage Gift Letter.

Once you’ve finished your draft, have a professional review it to make sure it meets legal and lender standards.

How Do I Document Funds Tied to a Gift Letter for a Mortgage?

There are a few steps you can take to properly document funds tied to a Gift Letter for a Mortgage:

  1. Both donor and recipient should provide bank statements showing the withdrawal of the gift fund from the donor’s account and the deposit into the recipient’s account.
  2. Provide receipts of wire transfers, deposit slips or copies of the check used for the transfer.
  3. Provide any other documents that your lender requests.

What Is a Gift of Equity Letter?

A Gift of Equity Letter is a document used in real estate transactions. It’s similar to a Gift Letter for a Mortgage but with some key differences.

In writing a Gift of Equity Letter, the seller, typically a family member, verifies the transfer of a portion of their home’s equity to the buyer as a gift.

This gift reduces the amount of cash the buyer needs to make the purchase. The letter must include details about the property, the amount of equity gifted, and a statement affirming that the gift does not require repayment.

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gift letter for mortgage sample

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