Family Member Gift Letter Template

Many individuals may require financial assistance from their family members when purchasing a home. However, lenders often require proof that the money given to the borrower is a gift and not a loan. This is where a family member’s gift letter comes into play.

This article will explore what a gift letter is, its common uses, how to write one for a family member, and provide an example for better understanding.

What Is a Gift Letter?

A gift letter is a legal document that confirms that money given to a person is a gift and not a loan. It serves as proof to lenders that the borrower has not taken on additional debt in the form of a loan. Lenders may request a gift letter if they notice a large deposit into the borrower’s account or if there are other signs suggesting that funds from a third party are being used for the purchase.

The gift letter typically includes important information such as the donor’s name, the borrower’s name, the relationship between the two parties, the amount of the gift, and a statement confirming that the money is indeed a gift and not a loan. Both the donor and the borrower must sign the letter to make it legally binding.

Common Uses for Gift Letters

Gift letters are commonly used in real estate transactions, particularly when a family member provides financial assistance for a down payment or closing costs for a mortgage. Some common scenarios where gift letters are required include:

• A parent helping their child purchase their first home
• Siblings pool their resources to help another sibling buy a property
• Grandparents assisting their grandchildren in buying a home

These are just a few examples of the various situations where gift letters may be necessary. It is important to consult with the lender to determine their specific requirements regarding gift letters.

How to Write a Gift Letter for a Family Member

Writing a gift letter for a family member may seem like a daunting task, but it is quite straightforward.

Here are the steps to follow:

1. Start with a Salutation

Begin the letter with a polite salutation, addressing the lender or loan officer who requested the gift letter.

2. Provide the Donor’s Information

Include the full name, address, and contact information of the donor (the family member providing the gift).

3. Identify the Borrower

Clearly state the full name of the borrower (the family member receiving the gift) and their relationship to the donor.

4. Specify the Amount of the Gift

Clearly state the exact dollar amount of the gift that is being provided to the borrower.

5. Confirm That the Money Is a Gift

Include a statement that clearly states that the money being given is a gift and not a loan. It is important to emphasize that the borrower is not required to repay the funds.

6. State the Purpose of the Gift

Explain the purpose of the gift, such as helping the borrower with a down payment or covering closing costs for a mortgage.

7. Sign and Date the Letter

Both the donor and the borrower should sign and date the letter to make it legally binding.

8. Notarize the Letter

Some lenders may require the gift letter to be notarized for added authenticity. Check with the lender to see if this is necessary.

Example

Here is an example of a family member gift letter:

[Donor’s Name]
[Donor’s Address]
[City, State, ZIP]
[Phone Number]
[Email Address]
[Date]

[Lender’s Name]
[Lender’s Address]
[City, State, ZIP]

Dear [Lender’s Name],

I am writing this letter to confirm that I, [Donor’s Name], am providing a financial gift to [Borrower’s Name] in the amount of [Amount of Gift]. The purpose of this gift is to assist [Borrower’s Name] with [Specify Purpose of the Gift, e.g., down payment or closing costs] for the purchase of their home.

I want to explicitly state that this money is a gift and not a loan. [Borrower’s Name] is under no obligation to repay the funds, and it is given freely and willingly to support them in their homeownership journey.

Please find attached my signature, indicating my agreement to provide this gift. [Borrower’s Name] has also signed this letter to acknowledge the receipt of the gift.

Thank you for your attention to this matter. Should you require any additional documentation or information, please do not hesitate to contact me.

Sincerely,
[Donor’s Name]
[Donor’s Signature]

[Borrower’s Name]
[Borrower’s Signature]

Free Family Member Gift Letter Template!

Share your generosity with ease using our family member gift letter template in Word! This customizable document simplifies formalizing gifts to loved ones, ensuring clarity and compliance with legal and financial guidelines.

Ideal for special occasions or thoughtful gestures, it’s a professional and heartfelt way to communicate your intentions. Start using it to make giving seamless and meaningful!

Family Member Gift Letter Template – Word