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

Posted on: 08th Apr, 2004 11:37 pm
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.
Can you have two sources of a gift letter? Half from one person and half from another?
Posted on: 04th Mar, 2009 08:49 pm
can my nephew gift me money for my mortgage?
Posted on: 04th Mar, 2009 09:41 pm
To just me... Yes, you will be able to submit two gift letters to your lender. I don't think that will be a problem.

To tlv...yes, your nephew can definitely gift you the money and you can use it as your down payment towards the mortgage.
Posted on: 05th Mar, 2009 12:25 am
if i'm going to be on the deed of the house, but not on the mortage, because i'm paying my half up front do i need to do a gift letter, and if i do a gift letter what are my rights as far as getting my half of the morgage back if something happened between my fiance and myself
Posted on: 03rd Apr, 2009 05:22 am
Hi

You can pay the money and do a gift of letter to the lender. But if you do a gift of letter you are not supposed to ask for a repayment of the money you pay. However, if you are on the title to the property, you will be entitled to your share in the property, in case it is sold.
Posted on: 03rd Apr, 2009 06:35 am
Hi,

My cousin signed a gift letter for $10,000 given to me. However, he is a bit insecure about providing his bank account information. So he took a screenshot of his bank account online that has all the account info and last 3-4 digits of his bank account. Will that be acceptable?
Posted on: 26th Apr, 2009 10:52 am
Every bank will handle that differently. Some may allow a screenshot and other may want a copy of the withdrawal out of his account and the deposit into your account.
Posted on: 26th Apr, 2009 06:13 pm
Ok, my cousin made me a copy of his bank statement, but blanked out the first couple of numbers and left the last 4 digits of his account number visible. He will also be writing me a check from that account. Would that then be acceptable?
Posted on: 27th Apr, 2009 12:40 pm
Hi

I think this should be acceptable. But again, as Eric had said, this may vary from lender to lender. Some may accept it, while others may not. You need to check with your lender and see if they will accept this.
Posted on: 29th Apr, 2009 03:44 am
I am putting a large down payment on a home so I can get a better rate. Do you think the mortgage company is going to want to know Where the money came from and if it was and gift or a loan??
Posted on: 04th May, 2009 04:07 pm
Hi Brad,

The lender would surely want to know the source of the money you are putting down, especially since it is a large amount. They would want to make sure that you have not borrowed the amount from some other source to make the down payment on this loan because if you have incurred another debt for the downpayment it may affect your affordability of the loan.

Thanks,

Jerry
Posted on: 05th May, 2009 06:23 am
Hi,

I received money as a gift towards the purchase of a home. Due to the short length of time that it has been in my accounts, my lender is requesting a gift letter to verify the source of the money. The relative that gave the money is not asking for repayment and it is mine free and clear except that it was given in cash and the person would rather not sign a gift letter. Am I obligated to reveal my source or is it sufficient enough to give my bank a signed statement that the funds are just mine and that I have had it for awhile (held in cash)
Posted on: 07th May, 2009 05:35 pm
You really need to convince the relative to sign the gift letter. Your other option is to wait a month or two until you get two months' statements with the gift reflected in the balance. Then use a different bank for your loan.

I really dislike switching lenders like that, but if you cannot get the gift letter you may be left with no other option.
Posted on: 07th May, 2009 06:29 pm
If I have already given my sister a check for $9000, why do I need to include my bank infomation on the Gift Letter?
Posted on: 22nd May, 2009 11:57 am
Hi

You need to provide your bank information in the gift letter so the lender can be sure that you indeed have given your sisiter the money and she has not borrowed the money from any other source. This is actually works as an evidence and convinces the lender that your sister has not incurred any further debts.
Posted on: 23rd May, 2009 07:03 am
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