Gift Letter for Mortgage: Free Template and Sample Wording

A gift letter for a mortgage is a signed statement from the donor that the money is a gift with no repayment expected. Your lender needs it before it counts gifted money toward your down payment or closing costs. A free gift letter template is below, along with sample wording a parent or relative can adapt.

This guide also covers who can give, how lenders trace the money, and what the gift means for taxes.

What is a gift letter for a mortgage?

A mortgage gift letter does two jobs for your lender. First, it shows that you don’t owe the money back. Money you must repay is a debt, so its monthly payment would count in your debt-to-income ratio (DTI), which compares your monthly debts to your income.

The letter also shows that the source is acceptable. In other words, the donor is someone your loan program allows, with no stake in the sale.

Who writes and signs the letter

The donor signs the gift letter, but you can draft it for them. Your loan officer may also supply a form. Fannie Mae and Freddie Mac require the donor’s signature. FHA goes further, because the donor and the borrower must both sign and date it. Most lenders also have the borrower sign on other loan types.

These gift rules don’t call for a notary, although a lender can add its own requirements.

What “fully executed” means

A fully executed gift letter for a mortgage is signed by everyone the form asks for. So if two parents give together and the form lists both, both should sign. An unsigned line can delay the file.

What a gift letter for a mortgage must include

Fannie Mae, FHA and VA all ask for these items, and USDA asks for a shorter version:

• The donor’s name, address and phone number
• The donor’s relationship to the borrower
• The dollar amount of the gift (Fannie Mae and Freddie Mac also accept a maximum amount)
• A statement that no repayment is expected
• The donor’s signature, plus the borrower’s signature and dates on FHA loans

Lenders often ask for more, so our template also has the borrower names, the property address, the source account and when the money moves. It has lines for two donors and two borrowers. In addition, it has a certification that the funds didn’t come from anyone with an interest in the sale.

Two situations need extra paperwork. If a relative who lives with you is pooling money with yours, Fannie Mae wants proof of 12 months of shared residence. If the money comes from a trust or estate, the Fannie Mae letter must name it. Ask your lender if it has its own form, and use that form if it does.

Sample wording for a gift letter for a mortgage

If you need to write the letter from scratch, a donor can adapt this wording. Replace everything in brackets, then keep a signed copy.

I/We, [donor name or names], of [street address, city, state, ZIP], phone [number], certify that I/we have given a gift of $[amount] to [borrower name or names], who is my/our [relationship, such as daughter or brother]. This gift will go toward the purchase of [property address].

No repayment of this gift is expected or implied, either in cash or in future services.

The funds come from [bank name, account type, account number]. They did not come from anyone with an interest in the sale, including the seller, builder, real estate agent or loan officer.

[Donor signature and date]

[Borrower signature and date]

Lenders can differ on down payment gift rules, so it helps to ask how each one handles gift funds before you apply.

Who can give gift money for a down payment

The answer depends on the loan, and FHA has the longest list of allowed donors.

Godparents and close friends aren’t named in Fannie Mae’s current list, so they qualify only if the relationship fits its family-like or mentorship wording. So ask what proof your lender wants. FHA also spells out “family member” narrowly, and its list names aunts and uncles but not cousins.

Who can’t give gift money

Builders, developers, real estate agents, loan officers and anyone else with an interest in the sale generally can’t give. The seller is usually barred as well. However, Fannie Mae allows a gift from a seller who is an acceptable donor and has no tie to other parties, as in a sale between relatives.

Gifts a lender won’t accept

These are the common problems:

• Untraceable cash: Fannie Mae, FHA and USDA don’t accept cash on hand as a source. Consequently, a donor holding cash should talk to the lender before depositing it.
• A disguised loan: Money with repayment terms isn’t a gift, even if nobody puts the terms in writing.
• Crypto that hasn’t been converted: Fannie Mae and Freddie Mac rules require an exchange into U.S. dollars. Although those rules address a borrower’s own holdings, a donor should also convert first and keep the records.

How lenders document a down payment gift

A gift letter for a mortgage is only part of the file, since your lender must also trace the money. Fannie Mae accepts proof that the funds sit in the donor’s account or have moved to yours. FHA, by contrast, wants the transfer itself documented. Expect a request for some of these records:

• The donor’s bank statement showing the withdrawal, plus your deposit record
• A copy of the donor’s check, or a withdrawal slip, plus your deposit slip
• Proof of an electronic transfer between the two accounts
• A wire, certified check or cashier’s check to the closing agent at settlement

Tell the donor about this early, because some people dislike sharing bank statements for someone else’s loan. Sending funds straight to the closing agent can also mean fewer steps.

Large deposits draw extra questions

Fannie Mae and FHA both flag a single deposit above 50% of your total monthly income. Say you earn $6,000 a month: any single deposit above $3,000 would need documentation. If it can’t be sourced, a Fannie Mae lender must subtract it from your verified funds.

Give the gift early and keep every record

Move the money early in the process, so your file has time to clear. Keep every receipt, and make sure the transfer matches the letter. If the amount changes, tell your lender, since a Fannie Mae loan may need to be resubmitted to its underwriting system. Similarly, Freddie Mac accepts a payment app only when records show the money went directly between bank accounts.

Down payment gift rules: how much can be gifted

Lenders don’t cap the dollar amount of a gift. Instead, the rules set how much of your own money you must add, and that depends on the property.

LTV means loan-to-value, or the loan amount as a share of the home’s value. To see what a gift may need to cover, take a $350,000 home. A 3% conventional down payment is $10,500, FHA’s 3.5% is $12,250, and 5% down is $17,500. These figures exclude closing costs, which a gift can also cover.

VA and USDA loans don’t require a down payment, so gifts there usually go toward closing costs. If the price tops the appraised value, a gift may help USDA buyers cover the gap. However, VA says that gap must come from the borrower’s own resources, so ask first.

Can you pay back a gift?

No. If the money must be repaid, it’s a loan, and the lender has to count its payment in your DTI. Calling a loan a gift on a mortgage application is also fraud, because federal law bars knowingly false statements made to influence a mortgage lender.

So if your relative expects repayment, tell your loan officer before anyone signs. Some programs allow a disclosed family loan. FHA, for instance, permits a second lien held by a family member, with its payments counted in your qualifying ratios. Fannie Mae, on the other hand, doesn’t accept unsecured personal loans as a source of funds.

Gift tax: the donor’s job, not yours

Gift tax paperwork belongs to the donor. Your lender doesn’t check it, and the person receiving the money generally owes no gift tax. The IRS also says a gift usually isn’t income to you.

In 2026, a donor can give up to $19,000 per recipient without filing a gift tax return, according to the IRS. A married couple can give $38,000 to one person. If only one spouse provides the money, however, the couple must file Form 709 to split the gift.

A larger gift means the donor files Form 709, though tax is rarely due. The excess counts against a lifetime exclusion of $15 million in 2026, and tax applies only after the donor uses it up.

Also, each parent can give $19,000 to the buyer and $19,000 to the buyer’s spouse, which totals $76,000 in 2026. Anyone planning a large gift should ask a tax professional first.

Seasoned money usually doesn’t need a gift letter

Money that has sat in your account for two statement periods usually counts as your own. Fannie Mae’s standard purchase file covers the most recent two months, or 60 days. Most lenders use about that window, but Freddie Mac can accept one month on some files, and FHA can accept less than two months of statements.

Say an aunt gave you $10,000 three months before you applied, and your statements don’t show the deposit. In that case, your lender probably won’t ask about it. Still, seasoning doesn’t change a loan into a gift. If you owe the money back, that debt still counts.

Gift of equity: a separate gift letter for a mortgage

A gift of equity happens when a relative sells you a home below market value and the difference counts as your down payment. For example, parents might sell a $300,000 home to their child for $240,000. The $60,000 difference equals 20% of the home’s value, and you’d borrow $240,000.

This needs its own gift of equity letter, and the settlement statement must list the gift. Our template isn’t built for it, since its certification rules out money from anyone in the sale, including the seller. So ask your lender for its gift of equity form.

Fannie Mae and Freddie Mac allow a gift of equity on a primary residence or second home when the seller is an acceptable donor. FHA allows it only between family members. FHA also limits family sales to 85% LTV, unless you’re buying the relative’s principal residence or a home you’ve rented from them for at least six months. USDA treats it as a price reduction.

For tax purposes, the seller has made a gift. A seller who passes the annual exclusion files Form 709.

Alternatives if no one can give

These options may fit, depending on your income, location and credit:

• Down payment assistance: Local programs offer grants or loans, and some are forgivable. Many have income limits or require a homebuyer course, so tell your lender early.
• A lower down payment loan: Conventional loans go as low as 3% for qualifying buyers and FHA loans require 3.5%. VA and USDA loans can reach 0% down.
• Seller-paid closing costs: These free up your cash, although they can’t fund the down payment. In 2026, FHA allows up to 6% of the sales price, and Fannie Mae allows 3% to 9% based on LTV.
• A 401(k) loan: The IRS generally caps these at 50% of your vested balance or $50,000, whichever is less. You must repay it, and plan rules vary.

A gift helps, but you still must qualify

You still need to meet your lender’s income, credit and DTI standards. A larger down payment can help, however, because a smaller loan lowers your payment and your DTI.

You’ll also need money for closing costs, reserves, moving and inspections. Fannie Mae lets a gift count toward reserves, subject to its minimums. By contrast, USDA and manually underwritten FHA loans don’t. If this is your first purchase, our first-time home buyer guide walks through the full process.

Gift letter for mortgage FAQ

Do all lenders require a gift letter?

Fannie Mae, Freddie Mac, FHA, VA and USDA rules all call for one when gifted money is used. The main exception is seasoned money that no longer shows as a new deposit. Freddie Mac also lets some wedding and graduation gifts go into your account without a letter, with other proof.

Who can give gift money for a mortgage down payment?

Parents and other close relatives qualify on every major loan type. Beyond family, the list changes by program, and FHA is the only one that names employers, unions and charities.

What happens if you pay back a gifted down payment?

If you and the donor agreed to repayment before closing, the letter was false, and that can be mortgage fraud. Your lender would also have qualified you without counting the debt. A later payment that nobody planned is a different situation, but repaying soon after closing can make the gift look like a loan.

Is there a limit on gift money for a down payment?

Loan programs set no dollar ceiling. Limits come from minimum contribution rules on certain properties, along with the donor’s own tax filing threshold. A gift above $19,000 per recipient in 2026 means a return for the donor, though usually no tax.

Does a gift letter get reported to the IRS?

A gift letter for a mortgage stays with your lender as part of the loan file. Any IRS reporting happens separately, through the donor’s Form 709. You don’t report the gift as income on your own return in most cases.

Can gift money be used on an investment property?

Not on a Fannie Mae or Freddie Mac loan, since both require your own funds on an investment property. FHA, VA and USDA loans are also built for homes you’ll live in. These limits apply to mortgages, so a cash buyer faces no lender rule on the source.

Your next step

Download the template, fill it in with your donor, and send it to your loan officer before the money moves. Then ask which transfer records your lender wants.