A gift letter for a mortgage shows your lender that you don't need to repay gift money toward your down payment. From my understanding, giving a gift to parents after they supply a gift and gift letter is fraud regardless of the funds' origins.Yes, all lenders will require a gift letter. Although you may have the funds, the lender needs to confirm that you won't have to repay the gift. The letter must explain who is gifting the money, where the donor's funds are coming from and the relationship between the donor and the recipient. Documentation: Requires a gift letter specifying the amount, relationship, and that no repayment is expected. LMCU will provide a form that the donor will need to complete and sign. Understand what a gift letter is, why you need it for a mortgage, and how to write one effectively to get your home purchase approved. The most important document required is a gift letter. If not, write an agreement and make monthly payments.