A signed letter from a family member confirming that money they gave you toward your home purchase is a gift, not a loan. Required documentation when gift funds are used.
If a family member is helping with your down payment or closing costs, the lender needs documentation that the money is a true gift — not a loan you'll have to pay back. That documentation is called a gift letter.
The letter has to include: the gift amount, the donor's name and relationship to you, the donor's contact info, the source of the funds, and a clear statement that no repayment is expected. Both the donor and the borrower sign it.
Lenders also need to source the gift — meaning, they need to see where the money came from on the donor's side. That typically means the donor provides a bank statement showing the funds, and the transfer to your account is documented (so a wire transfer is cleaner than cash).
Example
Your parents gift $20,000 toward your down payment. They sign a gift letter stating the amount, their relationship, and that no repayment is expected. They also provide a bank statement showing the $20,000 in their account before transfer, plus a wire receipt showing the transfer to you.
Also known as
gift fund letter, gift funds letter
Source:
CFPB