Letter of Explanation for Gift Deposit Template
The borrower-side letter for when underwriting flags a large deposit that was a gift.
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Here’s the opening of this letter so you can see the format and tone. The complete, ready-to-send version, with every section written out, comes in the editable DOCX & PDF download.
[Borrower Full Name]
[Borrower Address]
[City, State ZIP]
[Phone] · [Email]
[Date]
[Lender / Mortgage Company Name]
Attn: [Loan Officer / Underwriting Department]
[Lender Address]
[City, State ZIP]
RE: Letter of Explanation, Deposit of $[Amount] on [Deposit Date], Loan No. [Loan Number]
Dear [Loan Officer Name / Underwriting Team]:
I am writing to explain the deposit of $[Amount] that appears on my [Bank Name] account statement (account ending [Last 4 Digits]) dated [Deposit Date]. This deposit is a gift from [Donor Full Name], my [relationship], intended for use toward my down payment and closing costs on the property at [Property Address].
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When to Use This Template
Use this when your lender asks you to source a large deposit on your bank statement that came from a gift. It identifies the deposit, names the donor, and points to the enclosed gift letter and transfer records.
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Get Complete Library for $119Frequently Asked Questions
What is a letter of explanation for a deposit?
A short borrower-signed letter answering the underwriter's question about a specific deposit on your bank statement: what it was, where it came from, and documentation proving it. For gift money, it pairs with the donor's signed gift letter.
Why is my lender asking about a deposit?
Underwriters must source any deposit that looks large relative to your income or account history. They're checking it isn't an undisclosed loan that would change your debt ratios. A documented gift resolves it.
What should I attach to a gift-deposit explanation?
The donor's signed gift letter plus the money trail: copy of the check or wire confirmation, your deposit record, and, if asked, the donor's statement showing the withdrawal.
Can I avoid the letter by depositing gift cash?
The opposite, cash is far harder to source and can make funds unusable for qualification. Have the donor transfer by check or wire so every dollar has a paper trail.
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Important Disclaimer
This template is provided for informational and educational purposes only and does not constitute legal, financial, medical, or professional advice. Every situation is unique. You should consult with a qualified attorney or licensed professional before sending any formal correspondence, especially for matters involving legal rights, government agencies, financial disputes, employment issues, or family court proceedings. Use of this template does not create an attorney-client or professional-client relationship. Formal Letter Templates is not a law firm and does not provide legal services.