Understanding the Mortgage Gift Letter
A mortgage gift letter is a formal document employed to substantiate the source of funds used as a down payment or closing costs for a mortgage. Typically, a gift letter is required when the down payment or a portion thereof is provided by a family member or friend. This letter serves as evidence to the lender that the funds transferred are a gift and not a loan, thereby eliminating the necessity for additional financial documentation.
Essential Components of a Mortgage Gift Letter
A well-structured mortgage gift letter should incorporate several key elements to ensure its validity and acceptance by the lender. Firstly, the letter must clearly specify the names and contact information of the gift giver and recipient. Secondly, the exact amount of the gift must be stated in clear numerical terms. Thirdly, the letter should explicitly declare that the funds transferred constitute a gift and not a loan, and that no repayment is expected. Finally, the date of the gift transfer should be indicated accurately.

Drafting the Mortgage Gift Letter
When composing a mortgage gift letter, adherence to a formal tone and structure is paramount. The letter should commence with a clear and concise statement of purpose, outlining the intention to provide a gift for a mortgage down payment or closing costs. The subsequent paragraphs should elaborate on the details of the gift, including the amount, the relationship between the gift giver and recipient, and the confirmation that the funds are indeed a gift. The letter should conclude with a reiteration of the gift’s nature and the giver’s willingness to provide any additional documentation if required.
Sample Mortgage Gift Letter Template
[Name of Gift Giver]
[Address]
[City, State, ZIP]
[Phone Number]
[Email Address]
[Date]
[Lender Name]
[Lender Address]
[City, State, ZIP]
Dear [Lender Name],
I, [Name of Gift Giver], am writing this letter to confirm that I am gifting [Amount] to [Name of Gift Recipient] towards the down payment/closing costs of their mortgage loan.
[Name of Gift Recipient] is my [Relationship to Gift Recipient]. I am providing this gift freely and without expectation of repayment. The funds have been electronically transferred/delivered in cash/other payment method on [Date].
I understand that the lender may require additional documentation to verify the gift. I am happy to provide any necessary information.
Sincerely,
[Name of Gift Giver]
[Signature]
Conclusion
A mortgage gift letter is an indispensable document in the homebuying process when a gift is involved in financing the purchase. By comprehending the essential components and adhering to a formal style, individuals can effectively create a gift letter that satisfies lender requirements and expedites the mortgage approval process.
FAQs
What information is typically required in a mortgage gift letter?
A mortgage gift letter generally requires the names and contact information of the gift giver and recipient, the amount of the gift, a declaration that the funds are a gift and not a loan, and the date of the gift transfer.
Can a gift letter be handwritten?
While it is technically possible to handwrite a mortgage gift letter, it is generally recommended to type the letter for better readability and professionalism.
Is there a specific format for a mortgage gift letter?
There is no strict format for a mortgage gift letter, but it is important to include all necessary information and maintain a formal tone. The sample template provided can serve as a helpful guide.
Who should sign the mortgage gift letter?
The mortgage gift letter should be signed by the gift giver.
Can a gift letter be used for a portion of the down payment?
Yes, a gift letter can be used to cover all or part of the down payment for a mortgage.