What is a Mortgage Gift Letter?
A mortgage gift letter is a legal document that proves money used for your down payment or closing costs is a genuine gift, not a loan that must be repaid. Lenders require this letter to ensure you're not taking on hidden debt that could affect your ability to repay the mortgage.
💰 Why Gift Letters Are Critical
Without a proper gift letter, lenders may:
- Reject your mortgage application
- Require you to prove the funds are yours
- Count gift money as debt against your DTI ratio
- Delay your closing significantly
Key Elements of a Valid Gift Letter
Required Information:
- • Gift giver's name and relationship
- • Exact gift amount in dollars
- • Property address being purchased
- • Statement that it's a gift, not a loan
- • No repayment expected clause
- • Gift giver's signature and date
Documentation Needed:
- • Gift giver's bank statements
- • Proof of funds transfer
- • Recipient's bank statements
- • Copy of check or wire transfer
- • Gift giver's ID verification
- • Relationship documentation
Gift Letter Requirements by Loan Type
Different loan programs have varying requirements for gift money and gift letters:
🏛️ Conventional Loans (Fannie Mae/Freddie Mac)
Gift Requirements:
- 100% of down payment can be gift
- Closing costs can be gifted
- Must come from acceptable sources
- Proper documentation required
Acceptable Gift Sources:
- Relatives (spouse, child, parent, etc.)
- Domestic partner or fiancé
- Charitable organizations
- Government agencies
🏛️ FHA Loans
Gift Requirements:
- 100% of down payment can be gift
- 100% of closing costs can be gift
- No minimum borrower contribution
- Gift letter must be signed
Additional Sources:
- All conventional sources
- Employers
- Labor unions
- Religious organizations
🎯 Get Expert Gift Money Guidance
Working with gift money? Connect with lenders who specialize in gift fund documentation and can ensure your application goes smoothly.
Connect with Gift Money Specialists →Frequently Asked Questions
Can I use gift money for 100% of my down payment?
Yes, most loan programs allow 100% of the down payment to come from gift funds. FHA, VA, USDA, and conventional loans all permit this, though documentation requirements vary.
Do I need to pay taxes on gift money for a house?
No, gift recipients never pay taxes on gifts received. The gift giver may need to file Form 709 if the gift exceeds $18,000 per person in 2025, but typically won't owe taxes due to the lifetime exemption.
Can friends give me gift money for a house?
This depends on the loan program. FHA and VA loans allow gifts from friends, while conventional loans typically restrict gifts to family members, domestic partners, or charitable organizations.
How far in advance should I receive gift money?
Gift money should be received and deposited at least 60 days before applying for a mortgage, or you'll need extensive documentation. Some lenders require funds to "season" in your account for 2-3 months.
Ready to Use Gift Money for Your Home Purchase?
Get pre-approved with lenders who understand gift money requirements and can guide you through the documentation process.