FHA Gift Guidelines
If the borrower of an FHA mortgage loan does not have the 3% down payment requirement, they can receive a gift from a family member, buyer's employer, close friend or labor union. The gift can be used toward the down payment or closing costs.
FHA guidelines require the lender to document the gift funds by obtaining a gift letter, signed by the donor and borrower, that specifies the dollar amount of the gift, states that no repayment is required, shows the donor's name, address, telephone number and states the nature of the donor's relationship to the borrower. In addition, the lender must document the transfer of funds from the donor to the borrower. This can be done by showing the withdrawal from the donor's account with either a bank statement or a copy of the check from the donor's account. For the buyers side of the gift, they can either deposit the money directly into escrow or into their bank. If they deposit the money into their bank account, then a copy of the deposit slip from the bank for the same amount as the gift or a copy of a bank statement showing the deposit should suffice.
The gift donor may not be a person or entity with an interest in the sale of the property, such as the seller, real estate agent or broker, builder, or any entity associated with them. Donors may borrow gift funds from any other acceptable source provided the mortgage borrowers are not obligors to any note to secure money borrowed to give the gift
Gift funds may not be used toward reserves that are required by FHA on 3-4 unit properties. Gift funds cannot be used to increase the borrower's savings in the bank. They can only be used for the down payment and closing costs.
Please note: The above information is just an overview of the FHA gift guidelines used for underwriting an FHA mortgage loan, there may be other restrictions or guidelines that are not stated above. If you would like to discuss your personal situation, please E-mail or call us at 818-920-1600.
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