Give the Gift of FHA Down Payment

Give the Gift of FHA Down Payment

textA quintessential feature of any FHA loan is its

down payment scheme. The FHA requires a

borrower to come up with a minimum down

payment of at least 3.5% of the purchase price.

FHA Gift Fund Guidelines

What areGift Funds?

For gift funds to be accepted as“gift funds”, there should norepayment, whether implied orexpected, of such funds by theborrower to the donor pursuantto Chapter 5, Section B of theHUD Handbook 4155.1.

FHA Gift Fund Guidelines

Who may give Gift Funds?

A relative of the borrowerA borrower’s close friend whoseinterest in the borrower is clearlydocumented and definedA labor union or employer of theborrowerA public entity or a governmentagency that offers a homeownership assistance programA charitable organization

SellerBuilderReal estate agent or brokerAssociated entity

Not considered as gift donors:

Gifts from those entities are considered “inducements to purchase”and will have to be subtracted from the purchase price.

Gift Fund Verificationand Documentation

For their part, lenders are required to determine and verify thatthe gift funds were (i) from an acceptable source and (ii) thedonor’s own funds.

The lender shall document any gift funds through a gift letterduly signed by the donor and borrower.

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INFORMATION ORIGINALLY PUBLISHED JUNE/4/2016

INFORMATIONPROVIDED BY:

JUSTIN MCHOODHe is Americas Mortgage Commentator andhas been providing Mortgage commentary forover 10 years.

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