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Gift Letter 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)

⇓ PDF File

Instructions on Utilizing Gift Letter

Once you have the Gift Letter form in front of you, it’s time to fill it out accurately. This form is essential for documenting a financial gift, often required in real estate transactions. Follow these steps carefully to ensure all necessary information is provided correctly.

  1. Start with the date: Write the date on which you are completing the form at the top.
  2. Identify the donor: Fill in the name of the person giving the gift, along with their address and contact information.
  3. Provide recipient details: Enter the name and address of the individual receiving the gift.
  4. Specify the gift amount: Clearly state the amount of money being gifted. Make sure this figure is accurate.
  5. Describe the relationship: Indicate the relationship between the donor and the recipient. This helps establish the context of the gift.
  6. Include a statement of intent: Write a brief statement confirming that the funds are a gift and do not need to be repaid.
  7. Donor's signature: The donor must sign the form to validate the gift.
  8. Additional signatures: If required, have a witness or notary sign the document to further authenticate it.

After completing the Gift Letter form, review it for any errors or omissions. Once everything is in order, submit the form as directed, ensuring that it reaches the appropriate parties involved in the transaction.

Misconceptions

Gift letters are often misunderstood, leading to confusion for those looking to use them in financial transactions, particularly in the context of home buying. Here are nine common misconceptions about the Gift Letter form:

  1. Gift letters are only for first-time homebuyers. Many believe that only first-time buyers can utilize gift letters. In reality, anyone purchasing a home can use a gift letter to document financial assistance from family or friends.
  2. Gift letters must be notarized. While notarization can add a layer of authenticity, it is not a requirement for a gift letter. A simple signed letter from the donor is usually sufficient.
  3. All gifts need to be reported on tax returns. Not every gift requires reporting. The IRS allows individuals to give gifts up to a certain amount each year without tax implications. As of 2023, that limit is $17,000 per recipient.
  4. A gift letter can be used for any type of loan. Some may think that gift letters are universally accepted. However, not all lenders accept gift funds for every loan type, so it's important to check with your lender.
  5. Gift letters are only for cash gifts. Gift letters can document various forms of assistance, not just cash. They can also cover assets or property given to the buyer.
  6. The donor must live in the same state as the buyer. This is a common belief, but it’s not true. Donors can live anywhere, as long as the gift letter is properly documented.
  7. Gift letters can be verbal. While a verbal agreement may seem convenient, lenders typically require a written gift letter to ensure clarity and compliance with their policies.
  8. Gift letters are only needed at the time of closing. Many people think they can wait until closing to provide a gift letter. In fact, lenders often require it much earlier in the process, sometimes even with the initial loan application.
  9. There are no specific requirements for a gift letter. A gift letter should include certain key elements, such as the donor’s name, the recipient’s name, the amount of the gift, and a statement that the funds are a gift, not a loan. Failing to include these details can lead to complications.

Understanding these misconceptions can help clarify the role of gift letters in financial transactions and ensure a smoother process when securing funds for a home purchase.

Documents used along the form

A Gift Letter form is often used in real estate transactions to document financial gifts from family members or friends to assist with a home purchase. Along with this form, several other documents may be necessary to support the transaction. Here’s a list of related forms and documents commonly utilized in conjunction with the Gift Letter:

  • Loan Application: This document collects personal and financial information from the borrower, allowing lenders to assess their eligibility for a mortgage.
  • Bank Statements: Recent bank statements are required to verify the source of funds and demonstrate the borrower's financial stability.
  • Gift Donor’s Bank Statements: These statements help prove that the donor has sufficient funds to provide the gift, ensuring compliance with lender requirements.
  • Purchase Agreement: This legally binding contract outlines the terms of the home sale, including price, contingencies, and closing dates.
  • Proof of Identity: A government-issued ID from both the borrower and the gift donor may be required to verify their identities and prevent fraud.
  • W-2 Forms or Pay Stubs: These documents provide evidence of income, helping lenders assess the borrower’s ability to repay the loan.
  • Durable Power of Attorney: Utilizing a Durable Power of Attorney can be crucial, especially in real estate transactions where decision-making authority may be needed. For instance, empowering someone to act on your behalf can be vital if you are unavailable to manage your affairs. For the necessary documentation, refer to All Washington Forms.
  • Credit Report: Lenders often request a credit report to evaluate the borrower’s credit history and score, which influences loan approval and terms.
  • Title Insurance Policy: This document protects against potential disputes over property ownership and is usually required by lenders during the closing process.

Each of these documents plays a crucial role in ensuring a smooth transaction and maintaining transparency between all parties involved. Properly preparing and submitting these forms can significantly enhance the likelihood of a successful home purchase.