Ontario Mortgage Agent Practice Exam

When would a Gift Letter be required for a mortgage application?

1. A) When funds are from a Borrower's savings account

2. B) When funds are from a joint account with a spouse

3. C) If funds are from an inheritance

4. D) If funds are given by a family member for the down payment

The correct answer is: D) If funds are given by a family member for the down payment

A Gift Letter would be required for a mortgage application when the funds for the down payment are given by a family member. This is because lenders want to ensure that the down payment is not a loan and that the borrower is not taking on additional debt. Option A is incorrect because using funds from a borrower's savings account would not require a Gift Letter. This is because the borrower is using their own funds. Option B is incorrect because using funds from a joint account with a spouse would not require a Gift Letter. This is because the spouse is considered to be an equal owner of the funds and the lender can easily verify their contribution. Option C is incorrect because using funds from an inheritance would not require a Gift Letter. This is because the funds are considered a windfall and do not need to be repaid. Therefore, the most correct answer is D, as it is the only option that accurately describes when a Gift Letter would be required for a mortgage application.