Underwriting
Letter of explanation for a mortgage
A letter of explanation is a short factual note an underwriter asks for when a deposit, a credit inquiry, or a gap in work needs a source, a date, or a reason. It is not a gift letter. If someone gave you the money, you may need both this note and a gift letter.
Large deposit
Underwriters ask about a large deposit because money that appears in an account without a paper trail can look like an undisclosed loan. The letter should say what the deposit was, whose money it was, the date, and the amount. Your lender decides the dollar amount that counts as large. This page does not publish a threshold.
Credit inquiries
An underwriter asks about a credit inquiry to learn whether you opened a new debt that is not on the application yet. The letter should name the creditor, the date, why the credit was pulled, and whether you took on a new payment. Rate shopping that did not open an account is a different fact from a new loan. Say which one it was.
Employment gap
An underwriter asks about a gap in employment to see what you did between jobs and whether any income on the application belongs to that period. The letter should give the dates and what happened. It should not fill the gap with a job you did not have.
What is a letter of explanation?
It is a short factual note an underwriter asks for when a deposit, a credit inquiry, a gap in work, or another item on the file needs a source, a date, or a reason. It is not a gift letter. A gift that has already landed in your account often needs both.
Can the letter leave out where a deposit came from?
No. The draft uses only the facts you type, and it will refuse a request to hide or relabel the source. If you do not know a fact, leave it for your loan officer instead of guessing.
Are you affiliated with Fannie Mae, FHA, VA, or a lender?
No. Mortgage Gift Letter is not Fannie Mae, Freddie Mac, Ginnie Mae, FHA, VA, Nationwide, RBC, or any lender or broker. Notes on this site are summaries of public pages, with the source linked. They are not an official form.
Is this financial, legal, or mortgage advice?
No. We format a letter from facts you supply. We are not your loan officer, lawyer, or broker. Your lender’s requirements and forms take priority. Ask which format they accept before you rely on a draft.
What do I get before I pay?
A watermarked preview with the second half hidden, plus the blank templates on each page. Copy and download of the finished letter, as PDF and Word, unlock after purchase. Single letter is $4.99. Unlimited letters for one loan, for 30 days in this browser, is $9.99. If checkout is not connected, the button says coming soon.
Do UK and Canadian lenders use the same letter?
No. Requirements vary by lender. The UK page summarizes Nationwide’s published gifted-deposit page. The Canada page summarizes what RBC has published on its own site. Neither is a national form.