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What is a gift letter & how does it work?

Lenders will use the gift letter to verify the donor, the source of the funds, the amount of the money, and that the money is a gift and not a loan you’re obligated to pay back. Gift letters are legally binding documents.

What is a gift letter for a mortgage?

A gift letter for a mortgage is a written statement confirming that funds given to a borrower for a down payment are a gift rather than a loan that has to be repaid. The letter must explain who is gifting the money, where the donor’s funds are coming from and the relationship between the donor and the recipient.

How do you write a gift letter?

The gift letter ties the gift funds to the home you’re buying. 4. The information about the donor’s account, including the bank or investment company’s name, account number and account type (checking, savings or investment). Have a frank conversation with a potential gift donor to ensure they’re comfortable with it.

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