FHA Mortgages allow borrowers to use Gift Funds to meet the 3.5% down payment requirement. When using Gift Funds to purchase a home it is important that Gift Funds be documented properly to avoid any issues with the FHA underwriting process. The primary intention of these rules is too make sure that the FHA borrower is not also borrowing their required 3.5% downpayment and that these funds truly are a gift.
Acceptable sources for these gifts
- a borrower' relative
- a close friend with a clearly defined and documented interest in the borrower
- a charitable organization
- a government program that provides down payment assistance
How to accurately document these funds is as follows...
|
If the gift funds ... |
Then the lender must ... |
|
Are already in the borrower’s account |
obtain · a copy of the withdrawal document showing that the withdrawal was from the donor’s account · the borrower’s deposit slip · bank statement showing the deposit
|
|
Are to be provided at closing, and · are in the form of a certified check from the donor’s account |
obtain
· a bank statement showing the withdrawal from the donor’s account, and · copy of the certified check
|
|
Are to be provided at closing, and · are in the form of a cashier’s check, money order, official check, or other type of bank check |
· have the donor provide a withdrawal document or cancelled check for the amount of the gift, showing that the funds came from the donor’s personal account |
Reference
HUD 4155.1 Chapter 5, Section B 5-B-1
Comments(15)