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Fillable Form Gift Letter

If a relative or friend will giving you gift money to help make a down payment on or purchase a house, your bank and lender will require some type of written documentation that the money is in fact a gift, not a loan.

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What is a Gift Letter Form?

A gift letter form is a written statement that is required when someone lends you money for a mortgage down payment. The gift letter is a statement from the donor that tells that the funds are a gift with no expectation of repayment.

A gift can be a sale, exchange, or other transfer of property from one person to another. It may be cash, check, or other tangible items, transferring a title to stocks or real property without receiving anything in exchange for value, forgiving debt, or below-market loans.

The gift form contains the following:

  • The exact amount of the gift in dollars
  • The date the funds were or will be transferred
  • The donor’s signed statement that no repayment is expected
  • The donor’s name, address and telephone number
  • The donor’s relationship to the recipient
  • The mortgage gift letter form also identifies the address of the property the gift funds are being applied to
  • If you fail to fill out this form, your loan may be delayed or denied.

How to Fill Out a Gift Letter Form?

Applicant(s)
Provide the name of the applicant(s).

Loan Number
Enter the loan number on the space provided.

Donor
Provide the name of the donor.

Amount
Provide the amount being lent in dollars on the space provided.

Recipient
Provide the name of the recipient.

Relationship
Enter the relationship of the donor to the recipient.

Property Address
Provide the location of the property.

Source
Enter the source of the gift (a relative, friend, your employer, local labor union, government agency, or even a charitable organization’s bank account).

Donor Signature
Provide the signature of the donor on the space provided.

Date
Enter the date the gift letter form was signed and completed.

Donor Name
Provide the name of the donor.

Donor Phone Number
Enter the donor’s phone number.

Borrower’s Signature
Provide the borrower’s signature on the space provided.

Submission

Once the form has been completed and sign, you should deliver it to your lender as a part of your overall application paperwork. Your lender must review all your paperwork, including the letter.

Tips:
Before filling out this form, check which specific loan program applies to you based on the amount of gift fund you received.

  • VA gift funds - Home loans for eligible active and retired military borrowers. VA loans do not require a down payment.
  • USDA gift funds - Loans through the U.S. Department of Agriculture’s mortgage program. Require no down payment. Fannie Mae gift funds- the most common type of home loan in the U.S. The minimum down payment is 3% and the entire amount can come from a gift for a one-unit primary residence. A 5% minimum down payment from your funds is required if you’re buying a two- to four-unit property.
  • Freddie Mac gift funds - Your entire down payment can be gifted by a relative if you’re buying a single-family home as your primary residence. You’ll need to come up with up to 3% of your down payment funds if you’re purchasing a two- to a four-unit property with less than 20% down.
  • FHA gift funds - Loans made by FHA-approved lenders and allows the entire 3.5% down payment to be gifted

Keep in mind that the Internal Revenue Service (IRS) taxes gifts made over a certain dollar amount. Gifts up to $15,000 per person may be lent without any tax penalty. In most cases, the donor has to pay the gift tax, but there may be special cases when the person receiving the gift can agree to pay the tax instead.

Your gift letter has to be backed up with documentation. Keep a copy of the following:

  • Copy of a check made out directly to the closing agent
  • Copy of the settlement statement
  • Copy of the gift check and deposit slip showing funds deposited into your account
  • Copy of the withdrawal slip showing the funds leaving the donor’s account

If you are buying an investment property, gifts are not permitted. All of the funds for investment purchases must come from your own money.

To ensure that your application will be approved, make sure that the people who lend are allowed to give down payment gifts.

For conventional loans, only the following are allowed:

  • Immediate family members: parents, grandparents, siblings, and spouses
  • Soon-to-be family members: domestic partners, engaged couples, and future in-laws

For FHA loans, you can receive money from the following:

  • Family members
  • Friends (with a documented interest in the borrower)
  • Employers
  • Charitable organizations

You are not allowed to receive money from anyone with a vested interest in the sale of the house such as the seller, real estate agent, or the builder.

Make sure that all information supplied was factual and true. Section 1014 of Title 18, United States Code, covers the knowing making of false statements or willfully overvaluing any property or security to influence in any way the action of the enumerated agencies and organizations. Generally, the making of several false statements to a lending institution is a criminal violation.

You have to prove where your deposit came from. Some of the sources that are always nearly accepted are the following:

  • Personal savings - Keep a proof in the form of bank/saving account statements so there is evidence of the increasing balance over time.
  • Sale of a house - Prepare a proof that the property proceeds are not undercharged by someone else. There must also be evidence of these funds in your bank account at the time of completion.
  • Capital from another property
  • Inheritance - Prepare a letter from the executor detailing the amount you are receiving, and evidence of the funds in your account.

Gift letters can vary slightly depending on if it will be provided to the lender and/or accompany your board application package. If you are not given one, this form will do. If you are planning to use a gift toward purchasing a condo or co-op, it is always encouraged to bring it to the attention of your real estate agent or real estate attorney as soon as possible. This ensures you have advice on requesting the appropriate language in your gift letter as well as any additional documentation needed.

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