Gift Letter Rules: What Lenders Require from Your Donor

A parent wants to give you $20,000 for your down payment. Great. But the lender doesn't just take your word for it. They need a gift letter, and it must follow exact rules — or your loan falls apart.

Every Gift Letter Must Include

Lenders follow Fannie Mae and Freddie Mac guidelines. The gift letter must state:

• Donor's full name and relationship to borrower
• Donor's phone number and address
• Exact dollar amount of the gift
• Date the funds were or will be transferred
• Property address
• Statement that repayment is not expected or required
• Signatures of donor and borrower (both required)

Without all seven elements, the letter is incomplete and will be rejected.

Documentation the Donor Must Provide

A signed gift letter is not enough. The donor must also provide:

• A copy of their government-issued ID (driver's license or passport)
• A bank statement showing sufficient funds to cover the gift
• Proof of the transfer (wire confirmation, deposit receipt, or canceled check)

Lenders will trace the money. If the donor pulls cash out of their account, delivers it physically, and the borrower deposits it — that is a problem. Always do an electronic transfer or bank check.

Common Gift Letter Mistakes

• Using a letter from an ineligible donor (friend, cousin, coworker)
• Donor says 'gift' but adds repayment language
• Wrong property address (common when buying in a new development)
• Missing signatures because lender didn't receive the signed original

Can You Pay back a Gift?

No. Repayment turns a gift into a loan, which adds to your debt-to-income ratio. If the lender discovers a repayment arrangement, the loan will be denied. Gifts are truly gifts — no strings attached, by regulatory requirement.