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Fill Out a Valid Gift Letter Form

A Gift Letter form is a document that outlines a financial gift given to an individual, typically for the purpose of purchasing a home. This form serves to clarify that the funds are a gift and not a loan, which is crucial for mortgage approval. Understanding its importance can streamline the home buying process, so be sure to fill out the form by clicking the button below.

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Table of Contents

Form Overview

Fact Name	Description
Purpose	A Gift Letter form is used to document financial gifts, typically for home purchases, to clarify that the funds do not require repayment.
Required Information	The form usually includes details about the donor, recipient, amount of the gift, and the relationship between the two parties.
State-Specific Forms	Some states may have specific requirements or forms. For example, California requires compliance with the California Civil Code § 1624 for certain gift transactions.
Tax Implications	Gift amounts over a certain threshold may have tax implications. The IRS allows an annual exclusion amount, which may change annually.

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Documents used along the form

When it comes to securing a mortgage or financing a home purchase, a Gift Letter is often just one piece of the puzzle. This letter serves to confirm that a financial gift is not a loan, which can impact your debt-to-income ratio. However, several other documents may also be required to support your application. Here’s a list of important forms and documents you might encounter in this process.

Bank Statements: These documents provide proof of the donor's financial ability to give the gift. Lenders often want to see several months' worth of statements to ensure the funds are legitimate and available.
Gift Tax Return (Form 709): If the gift exceeds a certain amount, the donor may need to file this form to report the gift to the IRS. This is crucial for tax purposes and can help clarify the nature of the gift.
Proof of Funds Letter: This letter from the donor's bank verifies that the funds for the gift are available. It reassures lenders that the money is not coming from a questionable source.
Loan Application: This is the primary document that outlines the borrower’s financial situation. It includes income, debts, and assets, and is essential for determining eligibility for a mortgage.
Purchase Agreement: This is the contract between the buyer and seller of the property. It outlines the terms of the sale and is often required to show that a purchase is imminent.
Tax Returns: Lenders may request the borrower’s tax returns from the past couple of years to assess financial stability and income consistency.
W-2 Forms: These forms, provided by employers, summarize annual wages and taxes withheld. They help lenders verify the borrower’s income.
Credit Report: A credit report provides a snapshot of the borrower’s credit history and score. Lenders use this information to evaluate risk and determine loan terms.
Employment Verification Letter: This letter from the employer confirms the borrower’s employment status and income, which is crucial for assessing repayment ability.

Understanding these documents and their purposes can streamline the mortgage process and help ensure that your financial gift is properly recognized. Each document plays a vital role in building a complete picture of your financial situation, so it's essential to gather them carefully.

Document Sample

GIFT LETTER

Applicant(s):

Loan Number:

I,				, do hereby certify the following:
	(Donor)
(1) I have made a gift of $			to
		(Amount)			(Recipient)
	Whose relationship is:
		(Relationship)

(2) This gift is to be applied toward the purchase of the property located at:

(Property Address)

(3)No repayment of the gift is expected or implied in the form of cash or by future services of the recipient.

(4)The funds given to the homebuyer were not made available to the donor from any person or entity with an interest in the sale of the property including the seller, real estate agent or broker, builder, loan officer, or any entity associated with them.

(5)The source of this gift is:

(Source)

Donor Signature		Date	Borrower Signature

Donor Name (Print or Type)			Borrower Signature

Donor Address
(	)

Donor Phone Number

WARNING: Our signatures above indicate that we fully understand that it is a Federal Crime punishable by fine, imprisonment, or both to knowingly make any false statement concerning any of the above facts as applicable under the provision of Title 18, United States Code, Section 1012 and 1014.

Attachments:

1.Evidence of Donor's Ability to Provide Funds.

2.Evidence of Receipt of Transfer of Funds.

Calyx Form - giftlttr.frm (05/02)