What Is a Gift Letter?

Short answer

A gift letter is a signed statement from the person giving you money for your down payment or closing costs confirming the funds are a gift with no expectation of repayment. Lenders require it, along with proof of the transfer, so the gift is not counted as a hidden debt. For 2026 the IRS annual gift tax exclusion is $19,000 per recipient per giver, or $38,000 from a married couple (IRS, as of October 2026); gifts above that require the giver to file a gift tax return but rarely result in tax.

Definition

A gift letter identifies the donor, their relationship to you, the dollar amount, the property address and the statement that no repayment is expected. Most programs allow gifts from relatives, and some from close friends, employers or domestic partners.

Worked example

A first-time buyer in Miami Gardens is purchasing a $350,000 home with FHA at 3.5% down: $12,250. Her parents give her $20,000 to cover the down payment and part of closing costs. The gift letter states: donor names, 'parents', $20,000, the property address, and 'no repayment expected.' Her parents provide a bank statement showing the $20,000 leaving their account and she provides her statement showing it arriving. Because each parent can give $19,000 without filing, a $20,000 gift from two parents ($10,000 each) is under the exclusion. The lender confirms she still has about $2,000 of her own funds plus one month of reserves after closing.

What the letter must include

• Donor's name, address, phone and relationship to the borrower.
• Dollar amount and the date of transfer.
• Address of the property being purchased.
• A statement that the funds are a gift and no repayment is expected or implied.
• Donor's signature (and borrower's on most lender forms).
• Supporting documents: donor's bank statement or wire receipt, and the borrower's statement showing receipt, or the closing statement if wired to title.

Program rules

FHA allows the entire down payment to be a gift from a relative, employer, close friend with a documented relationship, or charitable organization. Conventional loans allow gifts from relatives and domestic partners; on some investment-property loans gifts are not allowed. VA allows gifts for closing costs and any down payment. Gift funds do not count as reserves on some programs, so ask your loan officer.

In South Florida

Gifts from family are common in Miami, where prices outpace local incomes and many families pool resources. Local wrinkles: gifts wired from abroad are acceptable to most lenders but need the foreign bank statement, the wire receipt and sometimes a translation, so start early; cash gifts handed over in person cannot be documented and will not count; and large deposits appearing in your account in the 60 days before application will be questioned, so route gifts cleanly from the donor's account to yours or directly to the title company at closing.