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Give the Gift of FHA Down Payment


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We break down the FHA down payment scheme and talk about FHA Gift Fund guidelines.

Published in: Economy & Finance
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Give the Gift of FHA Down Payment

  1. 1. GivetheGiftof FHA DownPayment
  2. 2. 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.
  3. 3. FHA Gift Fund Guidelines What are Gift Funds? For gift funds to be accepted as “gift funds”, there should no repayment, whether implied or expected, of such funds by the borrower to the donor pursuant to Chapter 5, Section B of the HUD Handbook 4155.1.
  4. 4. FHA Gift Fund Guidelines Who may give Gift Funds? A relative of the borrower A borrower’s close friend whose interest in the borrower is clearly documented and defined A labor union or employer of the borrower A public entity or a government agency that offers a home ownership assistance program A charitable organization
  5. 5. Seller Builder Real estate agent or broker Associated 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.
  6. 6. Gift Fund Verification and Documentation For their part, lenders are required to determine and verify that the gift funds were (i) from an acceptable source and (ii) the donor’s own funds. The lender shall document any gift funds through a gift letter duly signed by the donor and borrower.
  7. 7. Click Here to learn more INFORMATION ORIGINALLY PUBLISHED JUNE/4/2016
  8. 8. INFORMATION PROVIDEDBY: JUSTIN MCHOOD He is Americas Mortgage Commentator and has been providing Mortgage commentary for over 10 years.