Gift Letter For Mortgage Template Pdf

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Understanding Gift Letters for Mortgage Applications

Securing a mortgage can be a daunting task, especially for first-time homebuyers. If you’re fortunate enough to receive financial assistance from a loved one, a gift letter can play a crucial role in the mortgage approval process. Understanding its purpose and how to craft a compliant gift letter is essential for a smooth mortgage application.

A gift letter is a formal document that states that a sum of money you receive from a family member, friend, or other donor is a non-repayable gift and not a loan. This letter serves as proof that the funds are not part of your income, thereby increasing your borrowing capacity.

Contents of a Gift Letter

A well-drafted gift letter typically includes the following information:

  • Donor’s name and contact information
  • Recipient’s name and contact information
  • Date of the gift
  • Amount of the gift
  • Source of the funds
  • Statement that the gift is irrevocable and non-repayable
  • Donor’s signature
  • Notarized signature (in some cases)

Importance of a Gift Letter

A gift letter carries significant importance in the mortgage process. Mortgage lenders rely on this document to ensure that the gifted funds are not a liability that could jeopardize the borrower’s ability to repay the loan:

  • Income verification: Lenders need to verify that the borrower has sufficient income to meet the mortgage payments. A gift letter demonstrates that the gifted funds are not part of the borrower’s regular income, but rather a one-time supplement.
  • Debt-to-income ratio: The debt-to-income ratio (DTI) compares the borrower’s monthly debt payments to their monthly income. A gift letter can help lower the DTI by reducing the borrower’s monthly payments, making it easier to qualify for a mortgage.
  • Down payment assistance: Gift letters can be used to cover a portion of the down payment, reducing the amount the borrower needs to save up.

Expert Advice for Crafting a Gift Letter

To ensure your gift letter meets lender requirements, follow these expert tips:

  • Use clear and concise language: Write the letter in a straightforward manner, avoiding technical jargon.
  • Provide specific details: Include all the essential information listed above, such as the gift amount, source of funds, and non-repayment statement.
  • Get notarized: In some cases, lenders may require the letter to be notarized, which verifies the donor’s identity and signature.
  • Submit a letter from the donor: Some lenders prefer to have a separate letter from the donor explaining the purpose of the gift and their relationship to the borrower.
  • Retain original documents: Keep the original gift letter and any supporting documentation for your records.


Q: Can a gift letter be used for any purpose?

A: Gift letters are typically used for mortgage down payments or closing costs, but they may also be accepted for other housing-related expenses, such as repairs or renovations.

Q: Is there a limit on the amount of money I can receive as a gift?

A: Lenders typically have limits on the amount of gifted funds that can be used towards a mortgage, usually up to a certain percentage of the home’s value.

Q: Can I use a gift letter for a loan other than a mortgage?

A: Gift letters can be used for other types of loans, such as auto loans or student loans, but specific requirements and limitations may vary.


A gift letter is a crucial document in the mortgage application process, providing lenders with assurance that the gifted funds are not a liability. By understanding the contents, importance, and expert advice for crafting a gift letter, you can maximize its effectiveness and increase your chances of mortgage approval. Remember to consult with a qualified mortgage professional for personalized guidance and support throughout your mortgage journey.

Would you like to learn more about gift letters for mortgages? Share your questions or insights in the comments section below!

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