Gift Letter for Mortgage: Free Sample Template and What Lenders Require
A gift letter for a mortgage is a signed statement from the person giving you money, confirming the funds are a true gift and don't have to be paid back. Lenders require it whenever gift money goes toward your down payment or closing costs. Below is what the letter has to say, a sample template you can copy, and the paper trail an underwriter will check against it.
What is a mortgage gift letter, and why do lenders want one?
A lender wants to know whether any of your money is really a loan in disguise. If a relative "gifts" you funds but expects them back, that's a debt, and it changes your debt-to-income ratio (DTI) and your risk profile.
The gift letter shuts that question down. It puts the donor on record, in writing, saying no repayment is expected. Your mortgage underwriter then matches the letter against bank records to confirm the money is real, came from an acceptable source, and actually landed in your account.
What does a gift letter for a mortgage need to include?
Lenders and loan programs each have their own wording, but almost every gift letter covers the same core items:
- Donor's full name, address, and phone number
- Donor's relationship to the borrower (parent, sibling, grandparent, etc.)
- The exact dollar amount of the gift
- Date the funds were or will be transferred
- A clear statement that no repayment is expected, in cash or in services
- The address of the property being purchased (or "to be determined" if you're still shopping, depending on the lender)
- Source of the funds (the donor's account the money is coming from)
- Signatures of the donor and the borrower, with dates
In practice, missing the "no repayment" line or the relationship is what gets a letter kicked back. Get those two right first.
Sample gift letter for a mortgage (template)
Here's a gift letter template you can adapt. Your lender may hand you their own form. If they do, use theirs, since some underwriters will only accept their in-house version.
GIFT LETTER >I/We, [Donor Full Name(s)], of [Donor Street Address, City, State, ZIP], phone [Donor Phone], hereby certify that I/we have given or will give a gift of $[Amount] to [Borrower Full Name(s)], my/our [Relationship]. >This gift is to be applied toward the purchase of the property located at [Property Address, City, CA ZIP]. >The funds were/will be transferred on [Date] from [Bank Name], account ending in [Last 4 Digits]. >No repayment of this gift is expected or implied, either in the form of cash or future services. The funds are not made available to the borrower by any person or entity with an interest in the sale of the property, including the seller, real estate agent, builder, or loan originator. >Donor Signature: ____ Date: __ >Donor Printed Name: ____ >Borrower Signature: ____ Date: __ >Borrower Printed Name: ____
That's the full sample. Fill it out completely. Blank fields and handwritten corrections invite questions you don't need.
Who can give you gift money for a mortgage?
This is where the loan program matters. Rules differ by loan type, so here's how the major programs generally look:
| Loan type | Who can typically give a gift | Notes |
|---|---|---|
| Conventional (Fannie Mae / Freddie Mac) | Relatives by blood, marriage, adoption, or legal guardianship; fiancé(e) or domestic partner | Some scenarios require part of the down payment to come from the borrower's own funds |
| FHA | Family members, employer or labor union, close friend with a documented relationship, charitable organizations, government agencies | Donor cannot be an interested party to the sale |
| VA | Generally family and others without an interest in the transaction | Lender overlays vary |
| Non-QM / jumbo | Set by each lender | Often stricter documentation |
One rule holds across every program: the seller, the real estate agent, the builder, or anyone else who profits from the sale can't be the donor. That's an inducement, not a gift.
If you're comparing programs, our breakdowns of FHA mortgage requirements and conventional vs. FHA loans cover how each one treats your down payment.
Can you use gift funds on an investment property or second home?
Second homes: often yes on conventional loans, with conditions. Investment properties: conventional guidelines generally don't allow gift funds for the down payment at all. Investors usually need to show their own verified assets, which is one reason many look at DSCR loans in California and bring their own reserves.
If you're buying a vacation property, check the specifics in our guide to second home mortgage requirements before you count on gift money.
How do lenders verify gift funds?
The letter is only half the job. The other half is the paper trail, and this is the part that slows files down. Here's the move:
- Donor shows they had the money. Usually a bank statement from the donor's account showing the balance before the transfer.
- Transfer is documented. A wire confirmation, a copy of the cashier's check, or a bank transfer record.
- Deposit shows up in your account. Your bank statement showing the funds landing. Alternatively, the donor can wire directly to escrow.
- Everything matches. The amount, date, and account on the letter have to line up with the bank records.
The number that matters is the exact deposit amount. If the letter says one figure and the wire says another, the underwriter will ask why. Avoid splitting a gift into multiple odd transfers or moving it through a third account. Clean, single transfers clear fastest.
Timing matters too. Money that's been sitting in your account for a while may be treated differently from a fresh deposit, but any large, unexplained deposit will need to be sourced. Talk to your loan officer before the money moves, ideally while you're getting pre-approved.
What about a gift of equity?
A gift of equity is a different setup. A family member sells you their home below market value, and the difference counts toward your down payment. It still needs a gift letter, usually one that names the equity amount instead of a cash transfer. No money changes hands, so the appraisal and purchase contract do the documenting.
Does the donor owe taxes on a gift for a mortgage?
The borrower doesn't owe income tax on a gift. The donor may need to file a federal gift tax return (IRS Form 709) if the gift goes over the IRS annual exclusion for that year. Filing that form usually doesn't mean tax is owed, because larger gifts typically count against the donor's lifetime exemption. The donor should confirm their situation with a tax professional.
What are the most common gift letter mistakes?
- Donor is the wrong relationship for the program. A friend may be fine for FHA but not for conventional.
- Letter says "loan" or mentions any repayment. That turns it into a debt.
- Funds moved before anyone talked to the lender. You end up rebuilding the trail after the fact.
- Amounts don't match. The letter, the donor statement, and your statement all have to agree.
- Cash gifts. Physical cash is very hard to source. Use bank transfers.
If you're a first-time buyer combining gift money with assistance programs, our first-time homebuyer checklist walks through the full document stack.
Get your gift funds structured right the first time
Gift money can get you into a home sooner. A sloppy paper trail can also push your closing back. At Fast Financial, we review the donor, the program, and the transfer plan before any money moves, so the underwriter sees a clean file.
Ready to see where you stand? Get a rate quote, call Fast Financial at (661) 512-4141, or stop by our office at 190 Sierra Ct Ste 324, Palmdale, CA 93550. Rates, terms, and program eligibility vary by borrower and market. NMLS #2226871. Equal Housing Opportunity.
Frequently asked questions
Is there a standard gift letter form for a mortgage?
There's no single universal form. Most lenders provide their own gift letter template, and some require you to use it. The sample above covers the elements nearly every lender asks for.
Can a friend write a gift letter for a mortgage?
On FHA loans, a close friend with a documented relationship may qualify as a donor. Conventional loans generally limit donors to relatives, a fiancé(e), or a domestic partner.
Does a gift letter need to be notarized?
Usually not. Most lenders only need the donor's and borrower's signatures, but some lenders may ask for notarization, so check with your loan officer.
Can gift money cover closing costs as well as the down payment?
In many programs, yes. Gift funds can often go toward closing costs and the down payment, depending on the loan type and lender guidelines.
When should the donor send the money?
Talk to your lender first, then transfer. Ideally the money goes straight to escrow or into your account with full documentation, after your lender confirms the donor and transfer method are acceptable.