Gift letter for a mortgage: what lenders need

A gift letter is a short letter, signed by the person giving the money, that tells the lender a sum is a gift and not a loan. Lenders following Fannie Mae’s Selling Guide ask that it state the actual or maximum dollar amount of the gift (Fannie Mae Selling Guide B3-4.3-04, Personal Gifts). It must also give the donor’s name, address, phone number and relationship to the borrower, and say that no repayment is expected (Fannie Mae Selling Guide B3-4.3-04, Personal Gifts).

For an FHA loan, the handbook asks for the same items, and the letter must be signed and dated by both the donor and the borrower (HUD Handbook 4000.1, Gifts (Personal and Equity)). Your lender may ask for more, such as the account the money comes from or the date of the transfer.

The letter alone does not prove the money is there. The lender also checks the donor’s account or the transfer itself, so plan to send bank records with the letter.

The donor writes and signs the gift letter, usually a parent, grandparent or other relative of the borrower. Many lenders hand you their own gift letter form once you say part of the down payment is a gift, so ask your loan officer before you draft one. The letter goes into the loan file before closing, along with proof of the transfer.

1. Ask your loan officer whether the lender has its own gift letter form. If it does, use that form.
2. If not, fill in the template on this page with the donor: amount, relationship, contact details and the account the money comes from.
3. Have the donor sign and date it. For an FHA loan, you sign and date it too.
4. Ask the donor for a bank statement that shows the money in their account or leaving it.
5. Send the lender proof of the transfer: your deposit, the wire to the closing agent, or a copy of the check.

• A letter with no dollar amount, or an amount that does not match the money that arrived.
• Cash handed over and deposited, with no bank record of where it came from.
• A gift from the real estate agent, the builder or someone else with a stake in the sale.
• A loan dressed up as a gift, with a side deal to pay the donor back.
• A letter signed by the donor alone when the loan is FHA and the borrower’s signature is also required.

Most conventional loans follow the Fannie Mae Selling Guide. The table lists what its gift rules ask the letter to show. FHA loans add their own donor list and signature rule, covered in the FHA gift letter guide.

• If the gift that arrives differs from the amount in the file, a lender on Fannie Mae’s guide may need to rerun the loan (Fannie Mae Selling Guide B3-4.3-04, Personal Gifts).
• When the gift comes from a trust or an estate, Fannie Mae asks the donor to sign and to name the trust or estate account (Fannie Mae Selling Guide B3-4.3-04, Personal Gifts).

The lender has to see the money leave the donor and reach you or the closing agent. Under Fannie Mae’s guide, the lender checks that the funds are in the donor’s account, such as a checking, savings or investment account, or that they already reached yours (Fannie Mae Selling Guide B3-4.3-04, Personal Gifts).

Fannie Mae accepts papers such as the donor’s check with your deposit slip, the donor’s withdrawal slip with your deposit slip, or proof of an electronic transfer to you or to the closing agent (Fannie Mae Selling Guide B3-4.3-04, Personal Gifts). If the money goes straight to closing, it must arrive as a wire, a certified check, a cashier’s check or another official check (Fannie Mae Selling Guide B3-4.3-04, Personal Gifts).

FHA rules are close, with one addition: cash on hand is not an acceptable source of donor gift funds (HUD Handbook 4000.1, Gifts (Personal and Equity)).

A large deposit is, under Fannie Mae’s guide, a single deposit above 50% of your total monthly qualifying income (Fannie Mae Selling Guide B3-4.2-02, Depository Accounts). On a purchase, the lender must show such a deposit came from an acceptable source if you need it to close (Fannie Mae Selling Guide B3-4.2-02, Depository Accounts). Your bank statements show every deposit, so expect the lender to ask about the gift when it lands.

Under Fannie Mae’s guide, a relative can give: a spouse, child or other dependent, or anyone related to you by blood, marriage, adoption or legal guardianship (Fannie Mae Selling Guide B3-4.3-04, Personal Gifts). Some non-relatives qualify too, such as a domestic partner, a fiancé, a former relative, or someone with a long-standing family-like or mentor relationship (Fannie Mae Selling Guide B3-4.3-04, Personal Gifts).

Gifts from an employer, a charity or a government program are not personal gifts under Fannie Mae’s guide. It handles them under its separate grant rules in section B3-4.3-06 (Fannie Mae Selling Guide B3-4.3-04, Personal Gifts).

An interested party is anyone who gains from the sale, such as the builder, the developer or the real estate agent. Fannie Mae says the donor may not be, or be tied to, any of them (Fannie Mae Selling Guide B3-4.3-04, Personal Gifts). A seller who is also your relative can give under Fannie Mae’s guide, as long as they have no tie to another interested party (Fannie Mae Selling Guide B3-4.3-04, Personal Gifts).

Fannie Mae allows gifts on a principal residence or a second home, but not on an investment property (Fannie Mae Selling Guide B3-4.3-04, Personal Gifts). A gift can cover all or part of the down payment, the closing costs and the reserves on an eligible home (Fannie Mae Selling Guide B3-4.3-04, Personal Gifts).

Some loans need a slice of your own money first. On a two- to four-unit principal residence or a second home with a loan-to-value ratio above 80%, Fannie Mae asks for a 5% contribution from your own funds (Fannie Mae Selling Guide B3-4.3-04, Personal Gifts). At 80% or less, or on a one-unit principal residence, the whole amount can be a gift (Fannie Mae Selling Guide B3-4.3-04, Personal Gifts).

If a donor you have lived with for the past 12 months pools money with yours, Fannie Mae asks for the donor’s statement about the shared home (Fannie Mae Selling Guide B3-4.3-04, Personal Gifts). It also asks for papers that show you share an address, such as a driver’s license, a bill or a bank statement (Fannie Mae Selling Guide B3-4.3-04, Personal Gifts).

A loan from a relative is not a gift, whatever the letter says. If you will pay the money back, tell the lender: it is a debt. Fannie Mae’s guide tells the lender to look into any sign of borrowed funds (Fannie Mae Selling Guide B3-4.2-02, Depository Accounts).

Gift tax is the donor’s matter, not yours. The IRS says the donor is generally the one who pays any gift tax (IRS, Frequently asked questions on gift taxes).

The annual exclusion is the amount a person can give to each recipient in a year without it counting as a taxable gift. The IRS lists it at $19,000 per recipient for 2025 and the same $19,000 for 2026 (IRS, Frequently asked questions on gift taxes).

Each spouse has their own exclusion, so a married couple can give $38,000 to each recipient in 2026 (IRS, Frequently asked questions on gift taxes). Property the couple owns together is a gift from each of them (IRS, Frequently asked questions on gift taxes). Money from one spouse’s account can reach the same total if the couple elects gift splitting, which requires a Form 709 whatever the amount (IRS, Instructions for Form 709 (2025)).

If a donor gave more than $19,000 to one person in 2025, other than a spouse, they must generally file Form 709 for 2025 (IRS, Instructions for Form 709 (2025)). The return is due by April 15 of the year after the gift (IRS, Instructions for Form 709 (2025)). The donor should check with a tax preparer before a large gift.

• Fannie Mae Selling Guide B3-4.3-04, Personal Gifts: Sets who may give, what the gift letter must state, how the transfer is documented, and when a gift is not allowed or a minimum borrower contribution applies.
• Fannie Mae Selling Guide B3-4.2-02, Depository Accounts: Defines a large deposit as one above 50% of monthly qualifying income, requires its source on a purchase, and requires the lender to look into borrowed funds.
• HUD Handbook 4000.1, Gifts (Personal and Equity): For FHA loans, lists acceptable gift sources, rules out cash on hand, and requires a gift letter signed and dated by donor and borrower plus proof of transfer.
• IRS, Frequently asked questions on gift taxes: The donor generally pays gift tax; the annual exclusion is $19,000 per recipient for 2025 and for 2026, and each spouse is entitled to the exclusion on property owned together ($38,000 total per recipient).
• IRS, Instructions for Form 709 (2025): A donor who gave more than $19,000 to one person in 2025, other than a spouse, must generally file Form 709 by April 15 of the next year; spouses who split gifts must file Form 709 regardless of the amount.