Gift Letter for Mortgage: Rules & Templates (2026)

Getting a down payment gift can help you buy sooner - or quietly derail your mortgage pre-approval if it’s documented wrong.

In 2026, lenders don’t just ask where your money came from - they verify how, when, and why it moved. Missing one detail can:

• Delay your pre-approval
• Trigger underwriting conditions
• Or force you to re-submit your entire loan file

This guide shows you exactly how to use gift funds without risking your pre-approval, across FHA, VA, and conventional loans - and what lenders want to see before you apply.

Before you move money, make sure it works for pre-approval: Mortgage Pre-Approval: Easy Guide (2026)

Gift funds are reviewed during pre-approval, not just at closing.

Missing even one document can cause delays, added conditions, or a reduced approval amount.

Use this checklist to make sure your gift funds are pre-approval ready before you apply:

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• Signed mortgage gift letter: Must be signed by the donor (and borrower if required), clearly stating the money is a gift - not a loan.
• Donor bank statement showing funds available: Lenders verify the source of the gift, not just the letter itself.
• Proof of transfer: Wire receipt, canceled check, or deposit confirmation showing the money moved from donor to borrower.
• Deposit matches the gift letter exactly: Amounts, dates, and account names must line up - mismatches trigger underwriting questions.
• Seasoning requirement confirmed (if applicable): Some loan types require gift funds to be in your account 60+ days before application. This must be clarified before you apply.
• Gift of equity only: contract + appraisal language aligned: Purchase contract must reflect true market value and clearly show the equity gift amount.

If any of these are missing, lenders may pause your pre-approval or issue it with conditions - weakening your offer when it matters most.

Start pre-approval to verify your gift funds before underwriting

This ensures your documentation is reviewed upfront, so there are no surprises later.

A gift of equity is the difference between a home’s appraised market value and the lower purchase price a family member agrees to sell it to you for.

Example:

• Appraised value: $400,000
• Purchase price: $340,000
• Gift of equity: $60,000

That $60,000 can be used toward:

• Down payment
• Closing costs (loan-type dependent)

Most lenders allow gift of equity only when strict conditions are met, and they are verified during pre-approval, not after.

Generally allowed when:

• The seller is a family member (parent, grandparent, sibling)
• The home is a primary residence
• The gift is clearly documented and not a disguised loan

Loan programs that commonly allow gift of equity:

• FHA loans (most flexible)
• VA loans (for closing costs / equity credit)
• Conventional loans (with tighter documentation rules)

Investment properties are typically not eligible for gift of equity.

This is where most applications fail - not because equity isn’t allowed, but because the proof isn’t lender-ready.

You’ll typically need:

1. Gift of Equity Letter: Signed by the seller, clearly stating the equity is a gift with no repayment.

2. Purchase Contract with Correct Language

Must show:

• Market value
• Reduced purchase price
• Explicit gift of equity amount

4. Independent Appraisal

• Confirms true market value. No appraisal = no equity credit.

5. Equity Calculation

Lender verifies:

• Appraised value − purchase price = gift amount

6. Proof of Relationship

• Seller must be an eligible donor (usually a family member).

Because multiple documents must align, lenders strongly prefer reviewing gift of equity during pre-approval - not after an offer is accepted.

Even eligible buyers get denied when:

• The purchase contract doesn’t reflect true market value
• Appraisal is missing or ordered incorrectly
• Gift amount isn’t clearly calculated
• Seller relationship isn’t documented
• Lender discovers the “gift” is actually repayment-based

Any of these can delay or invalidate your pre-approval.

Timing matters just as much as documentation when it comes to gift funds.

Even a perfectly written gift letter can cause problems if the money moves at the wrong time.

Here’s how to time gift funds correctly to protect your pre-approval.

The safest approach is to confirm gift fund rules before you apply - or have the gift received and documented early.

This allows your lender to:

• Confirm whether seasoning is required for your loan type
• Review the gift letter and donor documentation upfront
• Prevent pre-approval conditions or delays

In many cases, lenders can approve gift funds without seasoning - but only if everything is documented correctly from the start.

Early verification keeps your pre-approval clean, strong, and offer-ready.

One of the most common mistakes buyers make is depositing gift money after pre-approval but right before underwriting.

This often triggers:

• Requests for additional bank statements
• Questions about undisclosed loans
• Delays in final approval
• Last-minute document chases

Even when the money is legitimate, late deposits raise red flags and slow everything down.

Some lenders want gift funds to appear in your account 60+ days before application so they’re clearly not borrowed money.

Seasoning rules vary by:

• Loan program (FHA, VA, Conventional)
• Lender guidelines
• Timing of the transfer

That’s why guessing - or waiting too long - can cost you time or approval certainty.

Not sure if your gift needs seasoning?

Start pre-approval and ask a loan expert before you transfer funds.

This lets you move money with confidence - not stress - and keeps your home purchase on track.

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A gift letter for mortgage is a formal, signed statement confirming that money given to you for a home purchase - usually for the down payment - is a gift, not a loan.

It’s a critical document mortgage lenders require to:

• Prove the source of funds

• Show you’re not secretly borrowing money

• Avoid disrupting your debt-to-income ratio (DTI)

This letter must come from the person gifting you the money - usually a parent, sibling, grandparent, or even an employer or charitable organization, depending on loan type.

Here’s what a mortgage gift letter should always include:

• Full name of the donor

• Relationship to the borrower

• Exact amount of the gifted funds

• The purpose (e.g., “down payment for 456 Main St, Texas”)

• No-repayment clause (“This is a gift. No repayment is expected.”)

• Donor’s signature and date

Pro Tip: Lenders often request a bank statement from the donor AND recipient to prove the source and transfer of funds. This prevents fraud and ensures the money is “seasoned.”

Compare FHA, VA, and USDA loan options to see which program fits your situation.

Pre-Approval Checkpoint

Lenders review gift letters during pre-approval, not just at closing.

If gift funds aren’t documented correctly before you apply, your pre-approval amount may:

• Be reduced
• Be delayed
• Or be issued with conditions that weaken your offer

The safest move: verify gift funds before you submit your pre-approval.

Start pre-approval with gift funds reviewed upfront

Here’s a mortgage-approved gift letter template you can copy, customize, or download as a Word or PDF file.

Whether you're applying for an FHA loan, conventional mortgage, or VA loan, this sample gift letter works for all lenders - including Fannie Mae and Freddie Mac.

Use this template if you're receiving:

• A cash gift for a mortgage down payment

• A gift of equity from parents or relatives

• A monetary gift to help with closing costs

This mortgage gift letter format meets requirements for:

• FHA gift letter rules

• Conventional loan documentation

• VA and USDA lender guidelines

• Bank verification for gift funds

Need to show proof? Attach this letter along with your bank statement, proof of transfer, or seasoned funds documentation for instant approval.

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Most lenders accept gift funds from close relationships - but not everyone qualifies. In 2026, knowing who can gift money for a mortgage is critical to avoid delays or rejections.

Here’s a verified list of eligible donors who can provide down payment gifts and sign a mortgage gift letter:

Not Allowed: Anyone who has a financial interest in the sale (e.g. seller, agent, builder)

Absolutely. A gift letter from parents to a child is the most common scenario. Just make sure:

• The funds are transferred from their account
• The gift letter clearly states no repayment is expected
• You attach their bank statement + transfer record

Parents helping kids buy their first home? You’ll need:

• A signed gift letter for mortgage down payment

• Proof of seasoned funds or a gift check

• Possibly a gift affidavit, depending on the lender

Using gift funds toward your mortgage down payment? Amazing - but it’s not just a bank transfer. You’ll need to document everything properly to avoid loan delays or denials.

Here’s how to use gifted money for your mortgage the right way:

1. Get a Signed Gift Letter

• Use it to confirm the money is a gift, not a loan

2. Collect Bank Statements

• The donor must show proof of available funds.
• You must show receipt of funds into your account.

3. Season the Funds (if needed)

• Ideally, receive the money 60+ days before mortgage application.
• This avoids red flags in underwriting (a process called “seasoning”).

4. Submit All Proof to Your Lender

• Attach gift letter, statements, and proof of deposit to your loan file.

What counts as “proof of gift” for mortgage?

A gift letter + bank statement + wire/transfer receipt = solid gold in underwriting.

No - most lenders do not allow gifted funds for investment property down payments.

You can use gift funds for:

• Primary residences (FHA, VA, USDA, Conventional)

• Second homes (with conditions - see below)

You cannot use gift funds for:

• Investment properties

• Commercial purchases

• Business-use mortgage loans

If you’re buying a rental or flipping a home - your own funds are required.

Some lenders want gift funds to appear 60+ days before application, so they’re not flagged as “unsecured loans.”

If you're close to applying, make sure:

• You document the gift transfer instantly
• You include the gift letter affidavit and bank records
• Ask your loan officer if seasoning is required for your mortgage type

• Use our Affordability Calculator
• Or get personalized loan estimates with reAlpha Mortgage.

Unseasoned gift funds are one of the most common reasons pre-approvals get flagged.

When you start pre-approval early, your lender can:

• Tell you if seasoning is required
• Time the transfer correctly
• Prevent last-minute denials
• Get pre-approved before you move the funds

Different home loans come with very different gift fund rules - and lenders check them closely. Here’s how to use a gift letter for mortgage approval based on the loan program you choose in 2026:

FHA loans are the most flexible when it comes to gift funds.

You can use a gift to cover 100% of your down payment and closing costs.

• Full donor info and relation
• Exact gift amount
• Clear “no repayment” clause
• Signature from both donor and borrower

• Family members (parents, siblings, grandparents, etc.)
• Domestic partners
• Employers or unions
• Charitable organizations
• Close friends with a documented relationship

FHA also allows gift of equity letters from family when buying their home.

VA loans don’t require a down payment - but gift letters are still used for closing costs or optional contributions.

• Family
• Friends
• Employers
• Nonprofits

• Seller or anyone with interest in the property sale

A VA mortgage gift letter must be signed and backed by proof of transfer (check, wire, etc.)

Conventional mortgages allow gift funds, but with tighter restrictions:

• 100% of down payment can come from gift funds

• Gift letter must comply with Fannie Mae gift letter template or Freddie Mac rules

• Allowed - but at least 5% must be your own funds if the LTV is above 80%

• Gift funds are not allowed

USDA loans offer 0% down, but buyers can use gifts for closing costs.

Gift letter must include:

• Donor name, relationship, and signature
• Exact gift amount
• “No repayment required” clause
• Documentation of fund transfer

Lenders may require:

• Gift affidavit

• Bank statements (donor + borrower)

• Wire transfer or check image

• Additional proof the gift wasn’t a disguised loan

If you're ever unsure, use our standard mortgage gift letter template (PDF) that satisfies all loan types.

Mortgage gift rules aren’t just about the loan - they also change based on the type of home you’re buying. Whether it’s your first house, a vacation property, or a future rental, here's what you need to know about gift funds and property eligibility.

If you're buying a primary home (your main place of living), you can use 100% gift funds for the down payment and closing costs - with no personal contribution required.

Allowed for:

• FHA, VA, Conventional, and USDA loans

• Single-family homes, condos, townhomes

Example: A gift letter for house purchase from parents fully covering the down payment is 100% acceptable under FHA guidelines.

Planning to buy a second home or vacation retreat? Gift funds are allowed - but with a catch.

You can use gift funds for:

• Conventional loans on second homes

You must contribute at least 5% of the down payment from your own funds if the loan-to-value (LTV) ratio is over 80%.

Can you use a gift for investment property down payments?

No - gift funds cannot be used for:

• Investment homes

• Rentals

• Multi-family flips

• Commercial properties

Lenders want to see 100% of the down payment from the borrower’s own funds for any income-generating real estate.

Using gift funds for an investment property can lead to denial or legal issues during underwriting. Always disclose your intentions clearly.

Once you submit a mortgage gift letter, your lender doesn’t just check the signature and move on.

That letter - and the funds tied to it - go through underwriting, where loan officers evaluate whether your mortgage application still meets financial requirements like:

• DTI ratio (Debt-to-Income)

• LTV ratio (Loan-to-Value)

• Asset verification

• Legal gift status

Here’s what you need to know in 2026

Yes - and in a good way.

When you use a gift for your down payment, it lowers your loan amount, which can reduce your monthly mortgage payment. This improves your debt-to-income ratio, making you look safer to lenders.

Example: If you receive $30,000 as a down payment gift, your total mortgage could be lower, meaning:

• Lower monthly payments

• Lower DTI ratio

• Better loan approval odds

They might - if you don’t prove it’s a gift.

Here’s what underwriters need:

• A signed mortgage gift letter

• A gift letter affidavit (if required)

• Bank statements from the donor and recipient

• Proof of wire, check, or transfer

• No signs of repayment agreements (texts, emails, etc.)

If anything looks like a loan in disguise, underwriting may reject it - or pause your approval until it’s resolved.

Yes. A mortgage gift letter is a legal document stating:

• The money is a gift

• There’s no expectation of repayment

• The donor will not hold ownership rights or equity in the property

Pro Tip: Always use a gift letter format that includes a legal declaration clause, like:

“This gift is given with no expectation of repayment and no future claim to the property.”

Big red flag. If you deposit gifted funds without a paper trail, underwriting might:

• Count it as unverified debt

• Delay your loan

• Trigger further documentation requests

• Flat-out deny your mortgage

Avoid this by submitting:

• Gift letter

• Donor bank statement

• Transfer proof

• Gift affidavit (if required)

Not always. Know the limits.

• Primary Residence: 100% gift funds allowed (FHA, VA, Conventional)
• Second Home: Gift OK, but must contribute 5% of your own money if LTV > 80%
• Investment Property: No gift funds allowed - must be all your own funds

Pro tip: Missing one document can delay your loan.

Follow these underwriting-proof steps:

• Get a signed gift letter
• Include donor + recipient bank statements
• Show proof of transfer (check, wire)
• Ask if your lender requires seasoning (60+ days)

If your gift looks like a hidden loan, your loan can be denied.

A gift letter doesn’t just help with your down payment -

it directly affects whether your loan gets approved smoothly.

Before you:

• Transfer money
• Make an offer
• Or commit to a home

Make sure your gift funds are reviewed and approved as part of your pre-approval, not after.

When you start pre-approval with reAlpha:

• Gift funds are reviewed upfront
• Documentation is verified early
• You avoid last-minute underwriting surprises

Start your pre-approval now

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