What Is Gift Letter?
Gift Letter: A signed statement from the person giving you money confirming it doesn't need to be repaid.
A gift letter is a short signed statement from the donor confirming that money given to you for the home is a gift, not a loan.
What it includes
- Donor's name, address, phone number and relationship to you
- The amount of the gift
- The property address
- A statement that no repayment is expected
- Where the money is coming from (the donor's account)
- Signatures of the donor and usually the borrower
Your lender will provide its own template.
Why lenders need it
If the money were a loan, it would add a payment to your debt-to-income ratio. The letter, plus a paper trail of the transfer, shows it isn't.
Good to know
Send gift money through traceable means (a check or wire), not cash. Cash deposits are hard to document.