Fill in Your Gift Letter Form

When preparing a Gift Letter, several other documents may also be necessary to ensure that the transaction is clear and compliant with financial regulations. Below is a list of commonly used forms and documents that often accompany a Gift Letter.

• Bank Statement: This document shows the donor's financial capacity to provide the gift. It typically includes recent transactions and the account balance.
• 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 and potentially pay gift taxes.
• Proof of Relationship: This document can be a birth certificate, marriage certificate, or other records that establish the relationship between the donor and the recipient.
• Loan Estimate: If the gift is part of a larger financial transaction, such as a home purchase, this document outlines the estimated costs and terms of the loan.
• Motor Vehicle Bill of Sale: Essential for documenting the transfer of ownership, this form acts as a receipt and proof of the transaction. For more details, refer to Templates and Guide.
• Settlement Statement: Also known as a HUD-1, this document details all the costs associated with a real estate transaction, including any gifts applied toward the purchase.
• Letter of Intent: This letter outlines the donor's intention to give the gift, providing clarity on the purpose and conditions of the gift, if any.

Including these documents along with the Gift Letter can help streamline the process and provide necessary transparency for both the donor and recipient. Always ensure that all forms are accurately completed and submitted as required.

When filling out a Gift Letter form, it's important to follow certain guidelines to ensure everything is completed correctly. Here’s a list of things you should and shouldn’t do:

• Do provide accurate information about the donor and recipient.
• Do clearly state the amount of the gift.
• Do include a statement confirming that the gift is not a loan.
• Don't use vague language that could lead to misunderstandings.
• Don't forget to sign and date the letter.
• Don't leave out any required details, such as the relationship between the donor and recipient.

By adhering to these guidelines, you can ensure that the Gift Letter form is filled out correctly and effectively.

1. What is a Gift Letter?

   A Gift Letter is a document used to confirm that a monetary gift has been given to a homebuyer. It provides assurance to lenders that the funds are indeed a gift and not a loan that needs to be repaid.

2. Why do I need a Gift Letter?

   When applying for a mortgage, lenders want to verify the source of your funds. A Gift Letter helps clarify that the money you received for your down payment is a gift, which can be crucial for your loan approval.

3. Who can provide a Gift Letter?

   Typically, a Gift Letter can be provided by family members, such as parents, grandparents, or siblings. Some lenders may also accept gifts from close friends, but this can vary by lender.

4. What information should be included in a Gift Letter?

   A proper Gift Letter should include:

   • The donor's name, address, and relationship to the recipient.
   • The amount of the gift.
   • A statement that the funds are a gift and do not need to be repaid.
   • The date the gift was given.
5. Do I need to provide proof of the gift?

   Yes, lenders often require proof of the gift. This may include bank statements showing the transfer of funds or a copy of the check used for the gift.

6. Is there a limit on how much I can receive as a gift?

   While there is no federal limit on gift amounts, lenders may have their own policies. It's important to check with your lender for any specific limits or requirements.

7. Can I use a Gift Letter for other expenses?

   Gift Letters are primarily used for down payments. However, some lenders may allow gifts to cover closing costs or other related expenses. Always confirm with your lender what is acceptable.

8. What happens if I don't provide a Gift Letter?

   Failing to provide a Gift Letter when required can lead to complications in the mortgage approval process. It may result in delays or even denial of your loan application.