Mortgage Gift Letter Questions

Mortgage Gift Letter Questions and Answers

Q. What is a Gift Letter (or Gift Fund)?

A Gift Letter provides documentation to a mortgage lender specifying gift money or gift funds that will be used towards a down payment for a mortgage loan.

Gift Letter / Gift Funds Instructions


Q. What documentation is needed for a Gift Letter/Gift Fund?

The proper documentation of gift funds is critical to your loan transaction, whether you are getting a FHA loan or other loan. The mortgage industry places a great deal of emphasis on establishing a formal paper trail of the gift (otherwise known as source of funds) so it is very important that you review and understand the requirements presented below. Furthermore, gift funds must be received from a relative, not a friend or acquaintance. Please note that the required documentation will differ depending on whether you have already received the gift or will receive the gift at a future date prior to settlement.


Q. My Gift Funds are Not Yet Received, what should I do?

  1. Provide executed gift letter. If you have applied for a FHA loan, the FHA Certification section must be signed by both the gift donor and the recipient acknowledging the warning stated in that section. FHA loans do not require notarization of the borrower's signature.

  2. The gift fund must be in the form of a cashier's check or certified check. The donor's name must be printed on the check (example: John Doe). A Cashier's check is preferred. Please Note: None of the gift money can be received in cash from the gift donor.

  3. Make a copy of the gift check prior to the deposit and also a copy of the deposit slip showing that the funds have been deposited into your account. Within three weeks of settlement, please send us a full copy of your bank statement showing the gift deposit. If it is unlikely that you will receive your statement in time please provide a letter from your bank (on bank letterhead and signed by a bank official) stating the following:

    • Deposit Amount
    • Deposit Date
    • Account Number
    • New Account Balance Amount


  4. FHA ONLY: Donor's ability must be verified by receipt of a copy of their most recent bank statement. Any large deposits will need to be explained and documented. The donor cannot have borrowed the gift funds through an unsecured loan.


Q. My Gift Funds are Already Received, what should I do?

  1. Provide executed gift letter. If you are applying for a FHA loan, the FHA Certification section must be signed by both the gift donor and the recipient acknowledging the warning stated in that section. FHA loans do not require notarization of the borrower's signature.

  2. Provide, from the gift donor, a copy of the front and back of the canceled gift check or a copy of the gift donor's full bank statement evidencing the withdrawal amount matching the actual gift amount.

  3. Make a copy of the gift check prior to the deposit and also a copy of the deposit slip showing that the funds have been deposited into your account. Within three weeks of settlement, please send us a full copy of your bank statement showing the gift deposit. If it is unlikely that you will receive your statement in time please provide a letter from your bank (on bank letterhead and signed by bank official) stating the following:

    • Deposit Amount
    • Deposit Date
    • Account Number
    • New Account Balance Amount


  4. FHA ONLY: Donor's ability must be verified by a copy of the most recent bank statement. Any large deposits will need to be explained and documented. The donor cannot have borrowed the gift funds thru an unsecured loan.


Please note that the gift letter and supporting documentation detailed above should be received in our office no later than three weeks prior to settlement. Additionally, when making your gift deposit, be sure to keep the gift deposit separate from any other money you may be depositing that same day. This will help to keep the paper trail separate and clean.

Be sure to call your processor or your loan officer if you have any questions.


Download the Gift Letter Form

For your convenience we have put together the Gift Letter form, including the gift letter instructions and guidelines above into an easy to download and printable form.