Process
Gift Letter
A signed statement confirming that money received from a family member or other approved source for your down payment is a gift and not a loan that must be repaid. Lenders require gift letters because borrowed down payment money would increase your debt and affect your ability to repay the mortgage. The letter must include the donor's name, relationship to you, the gift amount, and a statement that no repayment is expected.
Why It Matters
Gift Letter is a key milestone in the homebuying process. The typical purchase takes 30-60 days from accepted offer to closing, and each step — including gift letter — has specific timelines, requirements, and potential pitfalls. Being prepared for each phase prevents costly delays.
During gift letter, communication with your real estate agent, lender, and other professionals is critical. Respond to requests quickly, keep documents organized, and ask questions if anything is unclear. Delays at any step can jeopardize your closing date or purchase agreement.
Real-World Example
In a typical home purchase, gift letter occurs within a specific window. Missing deadlines related to gift letter can result in contract violations, lost earnest money, or even a failed transaction. Stay ahead of schedule.
Pro Tip
Create a homebuying timeline checklist and mark every deadline related to gift letter. Set calendar reminders 2-3 days before each due date so you're never scrambling at the last minute.