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Using a gift letter for a mortgage
 February 9 2016     Posted by Steve Bucher

Proof of Down Payment – the gift letter

Many buyers require financial help when pruchasing a home. Money is not allowed to just appear in an account – thats called “mattress money” or “mystery money”. So, banks have developed a gift letter system to allow family to contribute to the downpayment. The gift letter provides the confirmable link between the buyer and the source of the money.

A poorly written gift letter will waste time, energy and lead to frustrations for everyone. Don’t let this happen to you. Below are EASY tips on proper use of a gift letter, a link to your own copy of a working gift letter and to find out what a gift letter is NOT to be used for…

The Gift Letter

A gift letter identifies:

  • the giver
  • the receiver
  • relationship between giver and receiver
  • the amount
  • the property being purchased


  1. The giver is to be an immediate relative – parent, sibling, grandparent, aunt etc. Gifts from friends, bosses, common-laws, or family friends are not allowed in high ratio mortgages.
  2. The gift must not be a loan, be subject to repayment terms, or trade for an ownership percentage in the future. The terms of a gift letter are serious. The giver is agreeing by signing that the money is a true gift.
  3. The money must be provable either through deposit into the receivers account. The money deposited is to match exactly what is written on the gift letter…DO NOT deposit multiple items for this deposit.

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