This post covers everything you need to know about mortgage rent free letter.
Look!
I will open this post with two scenes.
Our first scene is ‘you are living with your spouse, parents, relatives, or friends and you do not pay any rent’.
If that is the case, do not feel shy!
You are not alone.
In fact, 3,560,345 adults in U.S. live rent free.
One of My friends (26) is among those 3.5m adults, he lives rent-free with his parents and works full-time. He saves 60% of his paycheck.
Let’s move to the next scene.
Our second scene is, despite living rent free, you want to buy your first property or you need to refinance an investment property that you own.
Here is where things (scene) get interesting.
You don’t have a rent history to show to your lender that you are capable to afford housing costs.
Any solution?
You will need a living rent-free letter (For the purpose of this post, we will call it mortgage rent free letter) from a house owner stating that you don’t pay any rent.
With a well-written rent-free letter, you can dramatically boost your borrowing power by presenting evidence that you do not pay rent.
You will find out why I’m saying that soon during or after reading this post.
Here I will explain;
- What is mortgage rent free letter?
- Why do you need it
- How to write an effective mortgage rent free letter
- mortgage rent free letter samples
- Mortgage rent free letter from a parent
- Mortgage rent free letter from a spouse
- Mortgage rent free letter from a landlord
- etc.
Let’s get started
Jump to section
What is mortgage rent free letter?
A mortgage rent free letter or simply a rent free letter is a brief statement of facts written by a homeowner or renter usually a parent, spouse relative, or friend to a potential lender to verify that he is currently living rent-free with a potential borrower.
This little letter contains brief clarifications you can use to cover any gaps in your supporting documentation for your underwriter.
Therefore with a well-written rent-free letter, your potential lender can be sure that you are living rent-free life thus there is no need to show a rent payment history to support your mortgage application.
Generally, I do not see a rent-free letter as a mere letter, I see it as a convincing tool that can boost your borrowing power especially when you’re planning to buy your first home or refinance an investment property you own while living rent-free.
Now let’s see how you can write an effective rent-free letter.
How to write an effective mortgage rent free letter
A mortgage rent free letter is written in a business letter format. Begin your letter with your address and contact information, followed by a date and the potential lender’s address, and state that you are writing to confirm that you have been living with the potential borrower rent-free and state for how long.
Finish your letter with SINCERELY followed by your signature and name
REMEMBER the aim of your mortgage rent free letter is to prove that the potential borrower is living rent-free.
Therefore to write an effective mortgage rent free letter do the following
- Provide your name, address, and contact information
- Include the date of the letter
- Include the potential lender‘s name and address
- Provide the name of the borrower
- Indicate your relationship with a borrower- a spouse, child, friend, or relative
- Instantly tell the lender that a borrower is living rent-free (in your opening paragraph)
- Provide the address of the house you live with the potential borrower
- State for how long have you lived with the borrower
- Be straightforward
- Maintain a professional tone
- Be honest
- Attach necessary documentation eg. Lease agreement that shows a borrower is not obliged to pay the rent
Mortgage rent free letter template
The following is the general template of rent free letter that you can modify to meet your circumstances.
Your Name
Address
City, State, Zip Code
phone
email
DATE
[Potential lender’s Name]
[Potential lender’s Street Address]
[Potential lender’s City, State, and Zip Code]
Dear [Mr/Ms. Recipient’s last name]
It is with great enthusiasm that I’m writing this letter to certify that [Name of the borrower], my [your relationship with borrower] is living rent-free with me in my apartment at [location] for the past [duration].
I understand that [Name of the borrower] is planning to buy his/her first home and he/she is now in the mortgage application process I strongly believe that this letter adds significant value to you in making a reasoned decision.
If you have any questions regarding this letter feel free to reach me at [email] or [phone].
Sincerely
Signature
Name
Mortgage rent free letter pdf
Here is a pdf format of rent free letter that you can free download for your offline use.
Mortgage rent free letter from a parent
The following is a sample Mortgage rent free letter written by a parent.
This sample is suitable if you are living rent-free with your parents.
Let’s see it!
Parent’s Name
Address
City, State, Zip Code
phone
email
DATE
[Recipeint Name]
[Potential lender’s Organization ]
[Potential lender’s Street Address]
[Potential lender’s City, State, and Zip Code]
Dear [Mr/Ms. Recipient’s last name]
I, Job Jackson of 8062 E. Primrose St. Mahopac, NY 10541 do hereby certify that My son Isack Job, 25yrs is living with me rent-free at my house located at 385 W. Princess Ave. Newburgh, NY 12550 for the past 4 years.
I understand that Isack is about to purchase his first home and is now in the mortgage application process. I am confident that this letter will assist you in making an informed decision.
If you have any questions about this letter, please contact me at jackson@email.com or (270) 788-3080.
Sincerely
Signature
Job Jackson
Mortgage rent free letter from spouse
The following is a sample Mortgage rent free letter from a spouse-wife/husband.
This sample is suitable if you are living with your spouse and you are not responsible to pay rent and you need a living rent-free letter to that effect.
Here we go!
Dear [Mr/Ms. Recipient’s last name]
I am writing this letter to confirm that Hellen Kim, my wife, has been living rent-free with me in my apartment at [place] for the past [period].
I’ve attached my lease agreement, which demonstrates that I am entirely responsible for paying the apartment’s rent. Hellen Kim, my wife, does not pay the rent.
I understand that Hellen Kim is looking to purchase her first separate real estate and is now in the mortgage application process. I am confident that this letter will assist you in making an informed decision.
If you have any queries about this letter, please contact me at [email] or [phone].
Sincerely
Signature
Name
Mortgage rent free letter from landlord
The following is a sample Mortgage rent free letter from a landlord
This sample is suitable if you are living in a rented house but you are not responsible to pay rent.
Check it out!
Dear [Mr/Ms. Recipient’s last name]
I am writing to certify that Greg Howard, my Tenant, has been living rent-free in my apartment at [location] for the past [time].
Our lease agreement provided for NATURAL LOVE AND AFFECTION rather than rent. Greg is more of a caretaker than a renter in my apartment. (I have enclosed the leasing agreement for your convenience.)
I am aware that Greg Howard is in the process of applying for a mortgage in order to buy his first home. I’m sure that this letter will help you come to a smart decision.
Please contact me at [email] or [phone] if you have any questions concerning this letter.
Sincerely
Signature
Name
That’s it for today
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