Mortgage Gift Letter Template. 6 samples

Crafting a Mortgage Gift Letter Template: A Complete Guide

Securing a mortgage is a significant step in the home-buying process. For many, financial assistance from family or friends can make a huge difference in their ability to afford a new home. When gifted funds are involved, a mortgage gift letter is a crucial document required by lenders. This guide will walk you through creating an effective mortgage gift letter template, ensuring a seamless process for utilizing gifted money in your mortgage application.

What is a Mortgage Gift Letter?

A mortgage gift letter confirms that money received from a donor is a gift, not a loan. This letter reassures lenders that the funds do not need to be repaid, which is vital for maintaining the borrower’s debt-to-income ratio and overall financial stability.

Importance of a Mortgage Gift Letter

Lenders require a mortgage gift letter to:

• Verify the legitimacy of the gifted funds.
• Ensure the gift does not affect the borrower’s financial obligations.
• Confirm the donor’s relationship with the borrower.
• Prevent money laundering or fraudulent activities.

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Components of a Mortgage Gift Letter Template

A comprehensive mortgage gift letter should include the following elements:

Donor and Recipient Information

Clearly state the donor's and recipient's names, addresses, and contact details. This establishes the relationship and provides necessary identification details.

Gift Amount

Specify the exact amount of money being gifted. Precision in the amount ensures no discrepancies during the mortgage approval process.

Gift Purpose

Mention that the money is intended as a gift to purchase a home. This confirms to the lender that the funds will be used appropriately.

No Repayment Clause

Include a statement that the money is a gift and does not need to be repaid. This clause is crucial for lender assurance.

Source of Funds

Detail the origin of the gifted funds, ensuring transparency in the financial transaction.

Donor’s Relationship to the Borrower

State the donor’s relationship to the borrower (e.g., parent, sibling, friend). This information helps the lender understand the nature of the gift.

Signatures

The donor and recipient must sign the letter affirming the authenticity of the information provided.

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Sample Mortgage Gift Letter Template

Sample 1: Gift for Down Payment Assistance

Subject: Gift Letter for Mortgage Down Payment

Dear [Lender's Name],

I am writing to confirm that I am gifting [Recipient's Name], my [relationship, e.g., son, daughter, friend], the amount of [gift amount] to be used towards the down payment on the purchase of the property located at [property address].

This gift is given freely and with no expectation of repayment. The funds are a bona fide gift and are not provided by any person or entity interested in selling the property.

Below are the details of the gift:

• Gift Amount: [gift amount]
• Donor’s Name: [Your Name]
• Recipient’s Name: [Recipient's Name]
• Relationship to Recipient: [relationship, e.g., son, daughter, friend]
• Property Address: [property address]

The gift funds have been transferred from my account [account details] to [Recipient's Name] on [date].

If you require any additional information or documentation, please contact me at [phone number] or [email address].

Sincerely,

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Sample 2: Gift for Closing Costs

Subject: Gift Letter for Mortgage Closing Costs

Dear [Lender's Name],

I am writing to confirm that I am gifting [Recipient's Name], my [relationship, e.g., son, daughter, friend], the amount of [gift amount] to be used towards the closing costs for the purchase of the property located at [property address].

This gift is given freely and with no expectation of repayment. The funds are a bona fide gift and are not provided by any person or entity interested in selling the property.

Below are the details of the gift:

• Gift Amount: [gift amount]
• Donor’s Name: [Your Name]
• Recipient’s Name: [Recipient's Name]
• Relationship to Recipient: [relationship, e.g., son, daughter, friend]
• Property Address: [property address]

The gift funds have been transferred from my account [account details] to [Recipient's Name] on [date].

If you require any additional information or documentation, please contact me at [phone number] or [email address].

Sincerely, 

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Sample 3: Gift for Home Improvement

Subject: Gift Letter for Mortgage Home Improvement

Dear [Lender's Name],

I am writing to confirm that I am gifting [Recipient's Name], my [relationship, e.g., son, daughter, friend], the amount of [gift amount] to be used towards home improvements for the property located at [property address].

This gift is given freely and with no expectation of repayment. The funds are a bona fide gift and are not provided by any person or entity interested in selling the property.

Below are the details of the gift:

• Gift Amount: [gift amount]
• Donor’s Name: [Your Name]
• Recipient’s Name: [Recipient's Name]
• Relationship to Recipient: [relationship, e.g., son, daughter, friend]
• Property Address: [property address]

The gift funds have been transferred from my account [account details] to [Recipient's Name] on [date].

If you require any additional information or documentation, please contact me at [phone number] or [email address].

Sincerely,

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Sample 4: Gift for Reducing Loan Amount

Subject: Gift Letter for Reducing Loan Amount

Dear [Lender's Name],

I am writing to confirm that I am gifting [Recipient's Name], my [relationship, e.g., son, daughter, friend], the amount of [gift amount] to be used to reduce the loan amount for the purchase of the property located at [property address].

This gift is given freely and with no expectation of repayment. The funds are a bona fide gift and are not provided by any person or entity interested in selling the property.

Below are the details of the gift:

• Gift Amount: [gift amount]
• Donor’s Name: [Your Name]
• Recipient’s Name: [Recipient's Name]
• Relationship to Recipient: [relationship, e.g., son, daughter, friend]
• Property Address: [property address]

The gift funds have been transferred from my account [account details] to [Recipient's Name] on [date].

If you require any additional information or documentation, please contact me at [phone number] or [email address].

Sincerely,

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Sample 5: Gift for Paying Off Mortgage Balance

Subject: Gift Letter for Paying Off Mortgage Balance

Dear [Lender's Name],

I am writing to confirm that I am gifting [Recipient's Name], my [relationship, e.g., son, daughter, friend], the amount of [gift amount] to be used towards paying off the remaining balance of the mortgage for the property located at [property address].

This gift is given freely and with no expectation of repayment. The funds are a bona fide gift and are not provided by any person or entity interested in selling the property.

Below are the details of the gift:

• Gift Amount: [gift amount]
• Donor’s Name: [Your Name]
• Recipient’s Name: [Recipient's Name]
• Relationship to Recipient: [relationship, e.g., son, daughter, friend]
• Property Address: [property address]

The gift funds have been transferred from my account [account details] to [Recipient's Name] on [date].

If you require any additional information or documentation, please contact me at [phone number] or [email address].

Sincerely,

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Sample 6: Gift for Covering Emergency Repairs

Subject: Gift Letter for Mortgage Emergency Repairs

Dear [Lender's Name],

I am writing to confirm that I am gifting [Recipient's Name], my [relationship, e.g., son, daughter, friend], and the amount of [gift amount] to be used to cover emergency repairs for the property located at [property address].

This gift is given freely and with no expectation of repayment. The funds are a bona fide gift and are not provided by any person or entity interested in selling the property.

Below are the details of the gift:

• Gift Amount: [gift amount]
• Donor’s Name: [Your Name]
• Recipient’s Name: [Recipient's Name]
• Relationship to Recipient: [relationship, e.g., son, daughter, friend]
• Property Address: [property address]

The gift funds have been transferred from my account [account details] to [Recipient's Name] on [date].

If you require any additional information or documentation, please contact me at [phone number] or [email address].

Sincerely,

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Conclusion

Creating a mortgage gift letter is essential when using gifted funds for a home purchase. By following the guidelines and utilising the provided template, you can ensure a smooth and efficient mortgage approval process. Always double-check the details and work closely with your lender to meet all requirements, securing your path to homeownership.

Mortgage further reading

• Get a mortgage gift letter template
• EMI full form
• mortgage borrower to do list checklist template