What is it?
Do you have a family member helping you out with your downpayment? Roughly 20-40% of first time home buyers get help from a family member during a home purchase, called a "gift". If you are receiving a gift, you will need a Gift Letter to show how much they are giving you.
A gift letter is a document that overviews and outlines the terms of a down payment gift for a real estate purchase. In simple, it shows the portion of the down payment that will come from a source/someone (such as a family member) other than the purchaser. This is money is meant for the down payment and is not to be repayable by the buyer.
How do you get a gift letter?
A form must be filled out by the borrower (recipient or purchasers) and the gifter (donor), who are the family members providing the gift. This form will be requested by the lender to prove that this part of the down payment was a gift and not borrowed.