ClauseryFree gift letter template (Word)
A letter from a donor to a borrower (and their lender) confirming that a sum of money given for a down payment is a true gift — not a loan that has to be repaid.
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A gift letter is required by mortgage lenders when part (or all) of a borrower down payment is being given by a family member or other donor. It confirms the money is a gift with no expectation of repayment, and states the donor relationship, the amount, and the source of funds.
Lenders require gift letters to ensure that gifted funds are not a hidden loan that would affect the borrower debt-to-income ratio. The donor typically needs to show proof of funds (bank statements) and a transfer paper trail.
What to include#
- Donor and borrower. Donor full name, address, phone; borrower name(s); relationship between donor and borrower.
- Gift details. Amount of the gift, date transferred (or to be transferred), and address of the property being purchased.
- No-repayment statement. Clear statement that the money is a gift and no repayment is expected or implied.
- Source of funds. Account the money came from (bank, institution) — lender may require statements.
- Signatures. Donor and borrower signatures, date; some lenders require notarisation.
How to fill it in#
Step 1: Check lender requirements
Ask your lender for their required format; many have their own template.
Step 2: Fill out before transfer
Draft and sign the letter before (or with) the wire transfer so the paper trail is clean.
Step 3: Document the transfer
Keep a copy of the wire/cheque and a gift receipt so the lender can trace the funds.
Step 4: Provide donor bank statements if asked
Lenders often want to see the donor ability to give and the withdrawal from their account.
Step 5: Sign and deliver
Donor signs, borrower signs, submit to the loan officer before underwriting.
Related templates and guides
Questions
Who can give a gift for a mortgage?
Typically immediate family (parents, grandparents, siblings, spouses); some loans allow gifts from close friends, employers or charities.
Is a gift letter legally binding?
It is a signed statement to the lender — lying (claiming a gift when it is a loan) is mortgage fraud.
Do I have to pay tax on a gifted down payment?
In the US the donor typically pays gift tax if over the annual exclusion (currently $18,000 per person per year, 2024); the recipient usually does not pay tax.
Do I need proof of the transfer?
Yes — lenders want to see the wire/cheque and the money landing in your account before closing.
Can the donor take the money back?
Once gifted and documented, no — that would be a loan, not a gift, and would change the loan picture.
These are general templates, not legal or tax advice. Have anything unusual reviewed for your jurisdiction.