A down payment gift letter template is a short, signed statement from the person giving you money for a home purchase, confirming the funds are a true gift and not a loan you’ll have to repay. Mortgage lenders require one anytime an unexplained deposit shows up in your account, because hidden debt changes your qualifying ratios. The letter itself fits on one page. Getting the required elements right, and backing it up with proof the money actually moved, is what keeps your closing on schedule.
What the Letter Must Contain
Underwriters look for the same specific pieces of information every time. Miss one and the letter comes back for correction, which can cost you days you may not have before closing. Both Fannie Mae and FHA call for the same core elements, with FHA slightly more prescriptive about format.
- Donor’s full name, address, and phone number, so the underwriter can reach them if questions come up1U.S. Department of Housing and Urban Development. FHA Single Family Housing Policy Handbook 4155.1 Section B – Acceptable Sources of Borrower Funds
- Borrower’s full name
- The exact dollar amount of the gift, matching the actual transfer to the penny
- The relationship between donor and borrower (mother, godfather, domestic partner, and so on)
- The property address, if known when the letter is written
- The date the funds were or will be transferred
- A clear statement that no repayment is expected or required. This is the single most important sentence in the letter. Without it, the underwriter treats the money as a loan, which increases your debt-to-income ratio and can sink the deal.
- Signatures of both the donor and the borrower. FHA explicitly requires both, and conventional lenders generally expect both as well.1U.S. Department of Housing and Urban Development. FHA Single Family Housing Policy Handbook 4155.1 Section B – Acceptable Sources of Borrower Funds
- The date the letter is signed
Notarization is not required by Fannie Mae or FHA. Some individual lenders ask for it as extra verification, so check with your loan officer before paying for a notary.
A Template You Can Copy
Replace the bracketed fields with your actual information. Your lender may provide its own form, so ask first, but this version covers every element the major loan programs require.
[Date]
To Whom It May Concern:
I, [Donor’s Full Legal Name], am providing a gift of $[Amount] to [Borrower’s Full Legal Name] to be applied toward the purchase of the property located at [Property Address].
[Borrower’s Name] is my [relationship, e.g., daughter, domestic partner, godson].
The funds were [or will be] transferred on [Date of Transfer] from my [source of funds, e.g., personal savings account at XYZ Bank].
This gift is given freely. No repayment is expected or required, and no conditions are attached to this gift. I have no financial interest in the sale of the above property.
Donor Signature: _________________________ Date: _________
Donor Printed Name: [Printed Name]
Donor Address: [Full Address]
Donor Phone: [Phone Number]
Borrower Signature: _________________________ Date: _________
Borrower Printed Name: [Printed Name]
Proving the Money Actually Moved
The letter by itself is not enough. Lenders need a paper trail showing the funds left the donor’s account and arrived in yours or at the closing agent’s office. Fannie Mae accepts any of the following:2Fannie Mae. Personal Gifts
- A copy of the donor’s check paired with your deposit slip
- A copy of the donor’s withdrawal slip paired with your deposit slip
- Evidence of an electronic transfer from the donor’s account to yours or to the closing agent
- A copy of the donor’s check made out to the closing agent
- A settlement statement showing receipt of the donor’s funds
If the gift hasn’t been transferred before settlement, the donor must deliver it to the closing agent as a certified check, cashier’s check, or wire. A personal check handed over at the closing table usually won’t satisfy the lender.
FHA adds one restriction: cash on hand is not an acceptable source. Your uncle can’t show up with an envelope of bills and call it a gift. The money needs to come from a verifiable account.1U.S. Department of Housing and Urban Development. FHA Single Family Housing Policy Handbook 4155.1 Section B – Acceptable Sources of Borrower Funds
Who Qualifies as a Gift Donor
Before you fill out the template, confirm the person giving the gift is eligible. Fannie Mae limits acceptable donors to two groups: relatives connected to you by blood, marriage, adoption, or legal guardianship, and non-relatives who share what the guidelines call a “familial relationship.” That second category includes a domestic partner, a fiancé, a former relative such as an ex-in-law, a godparent, a relative of your domestic partner, or someone with a long-standing mentorship relationship with you.2Fannie Mae. Personal Gifts Your lender may ask for a written explanation of the relationship if it isn’t obvious.
The donor cannot be affiliated with the builder, developer, real estate agent, or anyone else who stands to profit from the transaction.2Fannie Mae. Personal Gifts One exception: a seller who also happens to be an eligible family member, with no connection to any other interested party in the deal, can provide gift funds. FHA follows the same logic, requiring the lender to verify that the donor’s money wasn’t indirectly supplied by a party to the sale.1U.S. Department of Housing and Urban Development. FHA Single Family Housing Policy Handbook 4155.1 Section B – Acceptable Sources of Borrower Funds VA loans accept gift funds from family members and require a letter for any funds coming from someone not directly involved in the sale.
Mistakes That Get Letters Sent Back
Underwriters see the same problems again and again, and most of them are preventable.
Depositing the gift before writing the letter. Once a large, unexplained deposit hits your account, the underwriter flags it. If you don’t have a signed letter and donor documentation ready, you’ll chase paperwork while your rate lock runs down. Sign the letter before or at the same time the money moves.
Vague language about repayment. “I’m helping with the down payment” or “this is to assist with housing costs” is not clear enough. The underwriter needs the word “gift” and an explicit statement that no repayment is expected.
Mismatched amounts. If the letter says $25,000 but the wire shows $25,500, everything comes back. The dollar figure on the letter has to match the actual transfer exactly.
Missing the donor’s bank trail. Many borrowers submit the letter and their own statement but forget the donor’s side. The lender needs to see where the money came from, not just where it landed. Ask the donor for their withdrawal slip, cleared check, or wire confirmation upfront.
Waiting until the last minute. A gift package submitted days before closing leaves the underwriter almost no time to review. Submit the full documentation when you submit your loan application. If the gift happens later, get it to your loan officer within a day or two of the transfer.
What the Donor Should Know About Taxes
Gift taxes are the donor’s responsibility, not yours, and in most down payment situations nobody actually owes any tax. In 2026, an individual can give up to $19,000 per recipient per year with no reporting requirement.3Internal Revenue Service. Gifts and Inheritances A married couple giving jointly can double that to $38,000 per recipient.
When a gift exceeds the annual exclusion, the donor files IRS Form 709.4Internal Revenue Service. Instructions for Form 709 Filing the form doesn’t mean writing a check to the IRS. The excess simply reduces the donor’s lifetime gift and estate tax exemption, which for 2026 is $15,000,000 per person.5Internal Revenue Service. Whats New – Estate and Gift Tax A parent gifting $50,000 would report the $31,000 over the exclusion, owe nothing, and see their lifetime exemption drop by that amount. For most families this is a bookkeeping item, not a tax bill. The borrower does not report the gift as income and files nothing on their end.