Mortgage Resources

FHA Gift Fund Donor Guidelines

gift photoPhoto by JD Hancock

Alternate Sources for FHA Down Payment

Did you know you can buy a home with no down-payment out of your own pocket? Conventional loans and FHA loans both allow Gift Funds or Donor Funds to be used for your down payment. (VA loans still allow no down-payment options for Veterans)

Have you thought this before?  “I’d like to buy a home but don’t have the money for the down payment or closing costs!”  There are a lot of lesser-known alternative sources of funds that are acceptable to FHA.  Here is a list of what FHA allows for Gift Funds:

  • Gift Funds – Family, close friends (with no financial interest), employers, and charitable organizations (with no financial interest) are acceptable donors.
  • Loans from Immediate Family – Unsecured or secured against the subject property.  Payment must be calculated in ratios.
  • Secured Loans – Can be collateralized by investment accounts or real property.  Payments on loans against deposited funds (401K, etc.) aren’t considered in ratios.
  • Trade Equity – Borrower can trade real property as part of cash investment. (i.e. boat)
  • Sale of Personal Property – Requires third party estimate of worth and proof of sale (car, boat, motorcycle, eBay).
  • Bridal Registry Accounts – Account is opened prior to wedding to allow family and friends to deposit cash gifts.
  • Sweat Equity – Labor performed or materials furnished by the borrower before closing on existing or new construction.
  • Commission from Sale – Family member, who is a licensed real estate agent and entitled to the commission from the sale, can gift commission to borrower.
  • Rent Credit – When purchasing a home currently being rented, the amount of rental payments that exceed the fair market rent can be considered part of the cash investment.

Additional details and documentation requirements apply to each source but all are legitimate and workable.  Contact me for all the information.