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Mortgage Gift Letter - What is it and how to write it?

Mortgage Gift letter is what the donor of the gift writes to the lender stating that he has offered a gift of money to the home buyer.

Homebuyers often require extra funds to make their down payment or pay part/whole of their closing costs when there is shortage of cash to pay for these upfront costs. They can borrow from a non-profit organization but lenders often do not prefer borrowed money as the down payment. In this situation, cash gift from family members is very helpful.

When a gift is made available to a homebuyer applying for a mortgage, he needs to write a mortgage gift letter signed by the donor and attach it with the loan application form. At times, the lender may also provide the buyer with a Gift Letter form which the latter only needs to fill out.

However, if the gift is made by any non-family member such as friend, employer, etc, then a borrower needs to provide documentation of a very close and long lasting relationship.

How to write Mortgage Gift letter

A mortgage gift letter includes the following:
  • Name of donor of the gift
  • Name of the recipient
  • Relationship between the donor and recipient
  • Cash amount gifted
  • Address of the property for which gift is made
  • Source of the funds (bank account, brokerage account etc) as offered by the donor.

Apart from the above, the gift letter should also state that the buyer need not repay the gift amount. Also, the lender should be assured that the gift funds were not made available to the donor from any person involved with the sale of the property including the seller, broker, real estate agent, loan officer or builder etc.

With gift of money, a buyer can afford to purchase a bigger house. At the same time, he can borrow less and thus reduce his monthly payments. However, the homebuyer needs to provide a written statement and prove that the money he's putting down is a gift. Here's where a mortgage gift letter serves its purpose.

jameshogg's picture
jameshogg | Joined: December 20, 2005 02:58 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Guest,

If he has gifted you the money, I don't think you will be liable for paying it off. However, there are chances that you might be asked to add him to the property deed.

Thanks

Like | Dislike | Share | Posted: Wed, 04/06/2011 - 23:59

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

people dont wont to sign the paper work because it say that no re-payment has to be made-and they want there money back if they give a loan

Like | Dislike | Share | Posted: Sat, 10/16/2010 - 06:55 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I have saved tip cash earned income but it is not deposit in my bank account. Can I use that for down payment and I do have my paycheck that is showing cash advance(tips). Will the bank except that?

Like | Dislike | Share | Posted: Mon, 08/04/2014 - 21:14 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

How to write a letter to mention that I don't have any relationship with the seller

Like | Dislike | Share | Posted: Sun, 08/29/2010 - 17:05 | Post subject:

smith.sussane's picture
smith.sussane | Joined: September 18, 2008 09:57 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Victor!

Welcome to forums!

You are writing gift letters for two different people. This won't create any problem and I don't think the escrow company has to say anything in this matter.

Feel free to ask if you've further queries.

Sussane

Like | Dislike | Share | Posted: Wed, 05/04/2011 - 23:52

gmakerley's picture
gmakerley | Joined: November 9, 2007 07:36 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

That lender is too stubborn. That's not a very helpful hint from me, but it's just the truth. Perhaps you can somehow put together a letter or memo that describes the relationship you and your cousin have, so as to make a stronger case for the cousin giving you a gift.

Like | Dislike | Share | Posted: Mon, 05/10/2010 - 10:58

gmakerley's picture
gmakerley | Joined: November 9, 2007 07:36 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

you are welcome.

Like | Dislike | Share | Posted: Tue, 01/26/2010 - 07:13

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi again,

Thanks for answering my other question! What a fantastic site. Well, I have another query. As I mentioned we are putting down 30% and scraping every cent together to get a $417,000 conventional mortgage. Now, I have a pretty good income-debt ratio and I was wondering if I could use one of my credit card cash advance checks to add 1k or 2k to my checking funds? It is agonizing how close we are to having all of the funds, but I am trying very hard to come up with the extra cash :)

Could I deposit the check into my wife's bank account (my name is on there too) and have her in turn deposit that into our main checking account (where the funds are coming from)?

Any advice or ideas much appreciated :)

Thanks,

Like | Dislike | Share | Posted: Sun, 09/27/2009 - 08:34 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

If someone has written a cheque for the deposit on a condo, why would the mortgage lender (bank) ask for a gift letter?

Like | Dislike | Share | Posted: Sat, 09/18/2010 - 07:03 | Post subject:

jameshogg's picture
jameshogg | Joined: December 20, 2005 02:58 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Guest,

As far as I know, the statement that you've mentioned here stands applicable for May 2010. I don't think there is a limit to the gifting amount. However, if the person gifts an amount which is more than that lifetime gift tax exemptions, then the donor will have to pay taxes on that amount.

Thanks

Like | Dislike | Share | Posted: Wed, 05/19/2010 - 03:36

smith.sussane's picture
smith.sussane | Joined: September 18, 2008 09:57 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Jackie!

Welcome to forums!

In your earlier post, you have mentioned that the gift was given to you as a "certified check for 7k". In such a situation, the donor of the gift will be able to show the savings account details as a prove of the gift. The donor will not have to give a separate proof for the 4k.

Feel free to ask if you've further queries.

Sussane

Like | Dislike | Share | Posted: Tue, 12/29/2009 - 23:35

smith.sussane's picture
smith.sussane | Joined: September 18, 2008 09:57 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi krdont!

Welcome to the forums!

As it is a joint account, I guess both the spouses need to sign the letter.

Sussane

Like | Dislike | Share | Posted: Wed, 02/27/2013 - 21:26

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

my sister give me some money for buying apt .how i show as a gift

Like | Dislike | Share | Posted: Sun, 10/28/2012 - 10:05 | Post subject:

savior70's picture
savior70 | Joined: March 25, 2009 05:14 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

To Joni,

It should not be a problem if you get mortgage gift letters from 4 different relatives. There is no rule that states you cannot get more than one gift letters. You can get a gift letter from your girlfriend as well, provided you can show a long standing relationship with her.

To T Carter,

It’s true the lender will verify your relationship with the donor of the gift. But it does not mean the lender will check the donor’s birth, marriage certificate and things like that. The lender should not be too hard about your relationship with the donor. But they will check the source of the gift fund and will require the donor to provide with his/her bank statement.

Like | Dislike | Share | Posted: Fri, 11/20/2009 - 03:46

gmakerley's picture
gmakerley | Joined: November 9, 2007 07:36 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

i think sussane made a good point, in that the provision of the cd ought to be sufficient for what the lender needs. however, there must be more to it than that, so inquiring further is essential so you can understand just what they're driving at.

Like | Dislike | Share | Posted: Mon, 01/25/2010 - 07:25

sunnyca2009's picture
sunnyca2009 | Joined: August 4, 2009 07:15 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Ok This where you need to get cautious

Do nto use your credit cards or apply for any other loans before you close.

Better option woudl be if you are short, but know you can pay it off, borrow from yoru friends or family and pya them later

Even thoguh you say you have good debt to incoem ratio, you do nto want to do anythign which can affect it while you are talkign to the lender

So I woudl say donto do it

Like | Dislike | Share | Posted: Sun, 09/27/2009 - 09:41

smith.sussane's picture
smith.sussane | Joined: September 18, 2008 09:57 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi john!

Welcome to forums!

The bank will ask your mother to provide the bank statements. However, as your mother has provided the lender with proof of $80,000 CD from which money came, the lender shouldn't have asked for any more proof. You may ask the lender why he needs further proof.

Feel free to ask if you've further queries.

Sussane

Like | Dislike | Share | Posted: Sun, 01/24/2010 - 22:57

jerry's picture
jerry | Joined: October 17, 2005 03:24 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi sajjat,

You can refer to the following forum discussion to view a sample gift letter. It will give you an idea about how should write a gift letter.
http://www.mortgagefit.com/know-how/giftequity-letter.html#24715

Thanks,

Jerry

Like | Dislike | Share | Posted: Fri, 11/20/2009 - 05:00

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I'M A REAL ESTATE BROKER AND I'VE WRITTEN AN OFFER ON A HOUSE FOR MY DAUGHTER. I WANT TO GIVE HER ALL OF MY COMMISSION IN THE FORM OF A GIFT LETTER. HOW DO I DO THAT?

Like | Dislike | Share | Posted: Mon, 01/18/2010 - 10:30 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi. I am closing on my house in 10 days. A close family friend is giving me a "gift' of $2,000 towards closing costs. My immediate family can't afford to help & she is my only option. I told my mortgage broker & they said to have her say she's my relative instead of friend. If she signed the gift letter saying she's my Aunt, do lenders look into that? Do they verify relationships? This is stressing me out & I don't want her to get in trouble. Thanks

Like | Dislike | Share | Posted: Fri, 06/04/2010 - 08:51 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hello, my Son lives with his girlfriend, in a flat owned by her Mother. They want to buy the flat but do not have sufficient money to put down as the required deposit. Mother is prepared to cut the price of the property by £60,000 as a gift. She has no ready cash. Would the Mortgage people accept this as a deposit?

Like | Dislike | Share | Posted: Thu, 12/06/2012 - 09:21 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

i dont keep my savings in my bank account so cant show a statement , as it is kept in a safe at home

Like | Dislike | Share | Posted: Sun, 11/08/2009 - 23:34 | Post subject:

jameshogg's picture
jameshogg | Joined: December 20, 2005 02:58 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi nickwis,

As both husband and wife had signed a gift letter and given you the gift, it may help you while they file the lawsuit. However, in my opinion, it would be better if you could contact an attorney and take his opinion in this matter.

Thanks

Like | Dislike | Share | Posted: Wed, 06/30/2010 - 23:58

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

my wifes parents gifted us the down payment for our house. they both signed the gift letter. they now are going though bitter divorce and my wifes father is threatening to take us to court for the money stating it was a loan. by him signing the gift letter intention does this help us out in court

Like | Dislike | Share | Posted: Wed, 06/30/2010 - 17:50 | Post subject:

gmakerley's picture
gmakerley | Joined: November 9, 2007 07:36 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

wouldn't you think that NAR would have a Q&A for that kind of scenario? i think that's pretty deep, and, never having seen it happen before, i have a feeling lenders might be nervous about it. perhaps if NAR isn't up on the topic, you may want to check in with an attorney for some further clarification.

and i have to say i don't know what a lawyer would bring to the table.

Like | Dislike | Share | Posted: Mon, 01/18/2010 - 18:45

adonis's picture
adonis | Joined: October 22, 2005 05:04 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Welcome Gill snow,

It will be completely the lender's discretion whether or not they will consider this as a deal. Your son should contact the local lenders and check out their opinion in this regard.

Like | Dislike | Share | Posted: Thu, 12/06/2012 - 21:57

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

So we are doing a gift it has been done but now the bank is asking for a paper trail. The gift was given in form of a certified check for 7k from my fiancée father he can only show proof for 3k that he had in the bank. the other 4k he had home and can't show a papertrail. How would we go about doing this? Were stuck and don't know what to do. All help will be greatly appreciated.

Like | Dislike | Share | Posted: Mon, 12/28/2009 - 17:13

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

You should have blood relations with the donor in order to gift money to the said person.

Like | Dislike | Share | Posted: Wed, 10/06/2010 - 01:59

jameshogg's picture
jameshogg | Joined: December 20, 2005 02:58 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi nena,

An attorney can guide you in writing the letter which states that you don't have any relationship with the seller.

Thanks

Like | Dislike | Share | Posted: Mon, 08/30/2010 - 02:07

savior70's picture
savior70 | Joined: March 25, 2009 05:14 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi,

It is better to provide the lender with the bank statement to show that the funds were not borrowed by your daughter. However, if you cannot provide the bank statement, you can send the lender a gift letter stating you have given your daughter a cash gift for the mortgage. I think the lenders will not have any problem with that.

Like | Dislike | Share | Posted: Mon, 11/09/2009 - 03:04

Niicss's picture
Niicss | Joined: October 3, 2005 11:54 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

To L.Carter,

I think the person who owns equity in the property will be able to issue a gift of equity letter to the person purchasing the property. If you pay 20% down payment, then it will definitely lower your loan amount by that percentage.

To Guest,

It is necessary to give the proof of the fact as to where your daughter received the money from. As a result, you'll have to show a paper trail of your money.

Like | Dislike | Share | Posted: Mon, 04/12/2010 - 03:34

jameshogg's picture
jameshogg | Joined: December 20, 2005 02:58 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi tara,

Normally gift letters from non-family members are not taken into consideration by the lenders. However, funds from a non-family third party can be considered by the lender if the person can provide documentation of a very close and long lasting relationship. This is done primarily to prevent people from taking out personal loans which may increase the person’s debt to income ratio.

Thanks

Like | Dislike | Share | Posted: Wed, 06/15/2011 - 23:39

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I am giving a gift to my daughter for a mortgage. It will be a cashier's check, and I will write a letter stating it is a gift and I don't want repayment. Why do I need to show a paper trail of MY money when it is a cashier's check? I am not the one appling for the loan. It is not their business where I got the money, only that it is a gift. I resent this. Is it necessary?

Like | Dislike | Share | Posted: Sun, 04/11/2010 - 19:56 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi,
My husband and I are about to close on our first house. We are finding that we are running a bit short on the down payment. My husband's parents said that they would take out a small loan and gift it to us and we said we would pay them back. Is this not an "ok" thing to do? Should we throw caution to the wind on this?

Like | Dislike | Share | Posted: Mon, 12/20/2010 - 19:57 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

MY MOTHER WROTE MY FIANCE AT THE TIME A MORTGAGE GIFT LETTER IN THE AMOUNT OF $10,000 FOR THE DOWN PAYMENT OF OUR HOME. NOW ALMOST 5 YEARS LATER SHE SAYS SHE EXPECTS US TO PAY IT BACK WHT SHOULD I DO?

Like | Dislike | Share | Posted: Thu, 11/11/2010 - 11:02 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

already started the process..mediation coming up but I dont anticipate he will agree to pay. I made several errors: Should have gotten a promisary note - but we were to be getting married. I had assumed that he lied to me about asking his atty, but maybe not...I think my atty should probably depose the closing atty. My fiance did NOT want me at the closing...wasn't a red flag at the time, but looking back I wish I was there. I have a good case, but the gift letter may really screw me. People (ususally family members) loan money and write gift letters because it's req by the lender...I thik this is general knowledge, but don't know how that will play out in court

Like | Dislike | Share | Posted: Sun, 01/10/2010 - 11:21 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

already started the process..mediation coming up but I dont anticipate he will agree to pay. I made several errors: Should have gotten a promisary note - but we were to be getting married. I had assumed that he lied to me about asking his atty about when I can be added to the deed, but maybe not...I think my atty should probably depose the closing atty. My fiance did NOT want me at the closing...wasn't a red flag at the time, but looking back I wish I was there. I have a good case, but the gift letter may really screw me. People (ususally family members) loan money and write gift letters because it's req by the lender...I thik this is general knowledge, but don't know how that will play out in court

Like | Dislike | Share | Posted: Sun, 01/10/2010 - 11:23 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I am buying a home and my father is gifting me $25k. I wanted to pay back a $14k, 401k loan and then take out a total of $22 from my 401k. Is that a smart thing to do?

Like | Dislike | Share | Posted: Thu, 08/12/2010 - 10:19 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I gifted our son money for a [url=http://www.mortgagefit.com/refinance.html]refinance[/url] from a joint account. Can i just sign the gift letter or does my spouse need to sign also.

Like | Dislike | Share | Posted: Tue, 02/26/2013 - 21:29 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

1st what are the tax implications if someone gives a gift of say $50K to be used as a down payment.
2nd, this is for my daughter but she is not part of the mortgage so the gift would probably be coming to me, her step-father. How is that done?
Thanks,

Like | Dislike | Share | Posted: Thu, 03/17/2011 - 16:59 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

The total amount for the certified check was 7k. It was compiled of 3k he had in his account and 4k cash, that he brought from home to the bank in order to request the certified check for 7k. My question is how can we can we show a papertrail for his 4k he had at home, because all hhe had in the account was the 3k. Thank you for all help.

Like | Dislike | Share | Posted: Wed, 12/30/2009 - 11:57

adonis's picture
adonis | Joined: October 22, 2005 05:04 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Jackie,

I hope the donor of the gift had deposited the 4k in his bank account first and then had a check issued from the bank authority. Thus, there must be a document stating the deposition of the amount. Thus, while he withdraws the money in the form of a check, it will be considered as a proof.

Like | Dislike | Share | Posted: Wed, 12/30/2009 - 21:41

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

How i write a gift letter

Like | Dislike | Share | Posted: Mon, 11/16/2009 - 23:01 | Post subject:

adonis's picture
adonis | Joined: October 22, 2005 05:04 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Welcome Ms. Frankie,

The person who gifts the money may be liable for paying gift taxes. The person who receives the gift won't have to pay any taxes.

Like | Dislike | Share | Posted: Sun, 06/30/2013 - 22:40

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

hi just wondering how far will they go to verify the relationship of my uncle. My lender wants birth certificates from anyone who gave us help. Going to be pretty hard with marriages and deaths?

Like | Dislike | Share | Posted: Wed, 11/18/2009 - 17:24 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Does the recipient of a $20,000 gift money needed towards a down payment on a home need to pay taxes on the funds? If so, Fed? and/or State? He's my son and I need to know before going thru with this transfer.

Like | Dislike | Share | Posted: Fri, 06/28/2013 - 18:30 | Post subject:

jameshogg's picture
jameshogg | Joined: December 20, 2005 02:58 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi WendyR,

It is always better to tell the truth to the lender. Your friend can pose as your aunt but if the lender comes to know about the truth later on, he may take actions against you.

Thanks

Like | Dislike | Share | Posted: Fri, 06/04/2010 - 23:48

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

can a gift letter be from a non-family member. My son's father, needs a gift of 2,000. My mom gifted him the money. My son's father and I were never married, but have maintained a close relationship (17 years). He and my mother are very close and she considers him part of the family. Please give me your expert advice...Thanks so much

Like | Dislike | Share | Posted: Tue, 06/14/2011 - 09:54 | Post subject:

smith.sussane's picture
smith.sussane | Joined: September 18, 2008 09:57 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Guest!

Welcome to forums!

The person giving the gift will be liable for paying gift taxes. As the gift will be given to you, then you will be responsible to get a gift letter from the person giving you the gift and submit it to the lender.

Feel free to ask if you've further queries.

Sussane

Like | Dislike | Share | Posted: Fri, 03/18/2011 - 00:05

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

My family has been giving me miscelaniouse cash to deposit in my account, for the closing costs on a home I'm trying to buy. My mortgage company failed to inform me you cant hav cash deposits in youre account that aren't accounted for with some kind of paper trail.I hav numerouse cash deposits from $200 to $1,000 dollars The damage is already done what can I do?

Like | Dislike | Share | Posted: Sat, 04/09/2011 - 15:49 | Post subject:

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