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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.
Yes you cna absolutly do that

If thelender wants to know where the money came from, make sure to keep record of the sale, so it is avilable handy
Posted on: 26th Sep, 2009 02:26 pm
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,
Posted on: 27th Sep, 2009 08:34 am
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
Posted on: 27th Sep, 2009 09:41 am
i dont keep my savings in my bank account so cant show a statement , as it is kept in a safe at home
Posted on: 08th Nov, 2009 11:34 pm
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.
Posted on: 09th Nov, 2009 03:04 am
How i write a gift letter
Posted on: 16th Nov, 2009 11:01 pm
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?
Posted on: 18th Nov, 2009 05:24 pm
how many gift letters can i receive? i'm getting gift letters from 4 different relatives for the sum of $27000, would that be a problem? is a gift letter from a girlfriend acceptable or is it strictly from relatives?
Posted on: 19th Nov, 2009 11:57 am
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,

Is true the lender will verify your relationship with the donor of the gift. But it does not mean the lender will check the do 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.
Posted on: 20th Nov, 2009 03:46 am
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
Posted on: 20th Nov, 2009 05:00 am
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.
Posted on: 28th Dec, 2009 05:13 pm
The lender will require a gift letter from the donor of the gift mentioning that he/she had gifted the amount to the concerned person. You can ask your fiancee's father to contact an attorney and check out if he/she can help him with some suggestions in this regard.
Posted on: 29th Dec, 2009 12:58 am
Thank you for the response. The attorney told us that she would not be able to answer. The gift letter was for a total value of 7k from his father but the underwriter needs a papertrail and he can only show proof for 3k because that is what he had in the bank. The other 4k were also from him but it was cash. How would we go about showing proof for the 4k?
Posted on: 29th Dec, 2009 12:48 pm
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
Posted on: 29th Dec, 2009 11:35 pm
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.
Posted on: 30th Dec, 2009 11:57 am
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