FHA Mortgages: Documenting the Transfer of Gift Funds

FHA Mortgages and Gift Funds

 

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 souces for these gifts  

• a borrower's 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

 

 

 

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Keith Landis is a Licensed Mortgage Loan Officer covering all of Pennsylvania.  He can be reached toll free at 877 334 6094 or on his cell at 412 726 1654 or by email at klandis@keystonehomefinance.com 

NMLS # 137243

further information can also be found here....