What is a Gift Letter?

Gift Letter Definition

In the case where the mortgage applicant cannot come up with the full downpayment for a mortgage from their own resources, they are able to receive a gift from an immediate family member to assist them. This is called a gifted downpayment.

If the downpayment for a mortgage is gifted in full or in part, a gift letter is required to prove the authenticity of the gift.

Gifted Downpayment Process

The first step in securing a gifted downpayment is to complete a gift letter. At First Foundation we have a standard gift letter template that we have attached below. A gift letter should indicate the following:

  • The name of the gift giver
  • The name of the gift recipient
  • The total amount of the gift being received
  • That the gift is genuine and that there is no schedule for repayment
  • That the gift is in no way being supplied by a third party who has interest in the sale of the subject property


Once the gift letter has been drafted and signed by both parties, the exact amount of the gift (as stated in the gift letter) should be deposited into the gift recipients bank account. A copy of the gift letter with a bank statement showing the deposit will then be provided to the mortgage broker in order to satisfy the downpayment condition on the mortgage approval as set by the mortgage lender.

It is important to note that the gift should to be made directly to the recipient and shouldn't go directly from the giver to the Realtor (in trust) or the Lawyer.

Sample Gift Letter

Related Terms


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For more information on gift letters or any other downpayment options, please contact us anytime!

Last updated Oct 29, 2018