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A Gift Letter form is a document that confirms a monetary gift given to an individual, often used in real estate transactions. This form helps clarify that the funds are a gift and not a loan, ensuring transparency in financial dealings. If you need to fill out a Gift Letter form, click the button below.

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When it comes to purchasing a home, many first-time buyers may find themselves in need of financial assistance from family members or friends. In such cases, a Gift Letter form can play a crucial role in clarifying the nature of the financial support being provided. This simple yet important document serves to confirm that the funds given are indeed a gift, rather than a loan that requires repayment. By outlining the donor's intent, the Gift Letter helps lenders understand the source of the down payment, which can significantly impact the mortgage approval process. Typically, the form includes essential details such as the donor's name, relationship to the recipient, the amount of the gift, and a statement affirming that no repayment is expected. Understanding how to properly complete and utilize a Gift Letter can streamline the home-buying experience and alleviate potential concerns from lenders regarding the financial backing of the purchase.

Sample - Gift Letter Form

GIFT LETTER

Applicant(s):

Loan Number:

I,				, do hereby certify the following:
	(Donor)
(1) I have made a gift of $			to
		(Amount)			(Recipient)
	Whose relationship is:
		(Relationship)

(2) This gift is to be applied toward the purchase of the property located at:

(Property Address)

(3)No repayment of the gift is expected or implied in the form of cash or by future services of the recipient.

(4)The funds given to the homebuyer were not made available to the donor from any person or entity with an interest in the sale of the property including the seller, real estate agent or broker, builder, loan officer, or any entity associated with them.

(5)The source of this gift is:

(Source)

Donor Signature		Date	Borrower Signature

Donor Name (Print or Type)			Borrower Signature

Donor Address
(	)

Donor Phone Number

WARNING: Our signatures above indicate that we fully understand that it is a Federal Crime punishable by fine, imprisonment, or both to knowingly make any false statement concerning any of the above facts as applicable under the provision of Title 18, United States Code, Section 1012 and 1014.

Attachments:

1.Evidence of Donor's Ability to Provide Funds.

2.Evidence of Receipt of Transfer of Funds.

Calyx Form - giftlttr.frm (05/02)

Document Breakdown

Fact Name	Description
Definition	A Gift Letter is a document that states a monetary gift is being given to a recipient, typically for a down payment on a home.
Purpose	The primary purpose of a Gift Letter is to clarify that the funds do not need to be repaid, which is important for mortgage lenders.
Required Information	Gift Letters usually include the donor's name, the recipient's name, the amount of the gift, and a statement confirming that the funds are a gift.
Donor's Affidavit	Some lenders may require the donor to sign an affidavit, confirming the gift and acknowledging that it is not a loan.
State-Specific Forms	Certain states may have specific requirements or forms for Gift Letters. For example, California requires adherence to state laws regarding gift documentation.
Impact on Mortgage Approval	Providing a Gift Letter can positively impact mortgage approval, as it demonstrates additional financial support for the buyer.
Tax Implications	Gift amounts over a certain threshold may have tax implications for the donor, so it’s advisable to consult a tax professional.

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Misconceptions

Understanding the Gift Letter form is essential for anyone involved in real estate transactions or financial assistance. Here are seven common misconceptions about this important document:

Gift letters are only for first-time homebuyers. Many believe that only first-time buyers need to use a gift letter. In reality, anyone receiving financial assistance from a relative or friend for a home purchase may require one, regardless of their buying history.
Gift letters must be notarized. Some think that notarization is a requirement for gift letters. While notarization can add an extra layer of authenticity, it is not a mandatory step for all lenders.
All lenders require a gift letter. Not every lender mandates a gift letter. Some may have different requirements based on their policies or the specifics of the loan program.
Gift letters can be vague. It’s a common misconception that gift letters can be informal or lack detail. In fact, they should clearly state the amount of the gift, the relationship between the giver and the recipient, and confirm that the funds do not need to be repaid.
Gift letters are only necessary for down payments. Many people assume that gift letters are only needed for down payment assistance. However, they may also be required for closing costs or other financial contributions related to the home purchase.
Gift letters are the same as loans. Some confuse gift letters with loan documents. A gift letter signifies that the funds are a gift and do not need to be repaid, while a loan must be repaid according to agreed terms.
Gift letters can be provided after closing. There is a belief that gift letters can be submitted after the closing process. However, most lenders prefer to have this documentation before the transaction is finalized to ensure all financial aspects are clear and documented.

By addressing these misconceptions, individuals can better navigate the requirements associated with gift letters and ensure a smoother home buying process.

Documents used along the form

When applying for a mortgage or making a significant purchase, a Gift Letter form may be required to document funds received as a gift. However, several other forms and documents often accompany this letter to provide clarity and support during the financial process. Understanding these documents can help ensure a smoother transaction.

Bank Statement: This document shows the donor's account balance and transaction history. It helps verify that the funds for the gift are available and legitimate.
Proof of Identity: A copy of the donor's government-issued ID, such as a driver's license or passport, is often required. This helps confirm the identity of the individual providing the gift.
Gift Tax Return: If the amount of the gift exceeds a certain threshold, the donor may need to file a gift tax return. This document provides information on any potential tax implications of the gift.
Letter of Explanation: Sometimes, a brief letter explaining the nature of the gift and the relationship between the donor and recipient can be beneficial. It adds context and clarity to the transaction.
Loan Application: This form is filled out by the borrower to apply for a mortgage. It collects essential information about the borrower's financial situation, including income, debts, and assets.
Credit Report: Lenders often review the borrower’s credit report to assess creditworthiness. This document provides a detailed history of the borrower's credit activities.
Hold Harmless Agreement Form: For projects requiring liability protection, utilize our essential Hold Harmless Agreement resources to safeguard all parties involved.
Purchase Agreement: This legal document outlines the terms of the property sale, including the purchase price and conditions. It is crucial for establishing the legitimacy of the transaction.
Closing Disclosure: Provided before the closing of a mortgage, this document details all final loan terms and closing costs. It ensures transparency and allows the borrower to understand their financial obligations.

Each of these documents plays a vital role in the overall process of securing a mortgage or completing a significant financial transaction. By being prepared with the necessary paperwork, individuals can facilitate a more efficient and stress-free experience.