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FHA Gift Funds
FHA home loans are very popular, especially for first time home buyers. However, the FHA Mortgage Loan requires a 3.5% down payment. If a borrower does not have the funds available for the down payment there are some options that can help them. The borrower may receive Gift Funds from a relative, close friend, employer, or labor union. The Gift Funds may only be used for closing cost or the down payment. FHA will not accept Gift Funds to increase the borrower’s savings account, or if being used towards reserves that are required by FHA on 3-4 unit properties.
The FHA Guidelines for the Gift Funds clearly states that any entity or person with an interest in the property may not contribute in any way to the Gift Funds. The gift donor may not include the seller, real estate agent or broker, builder, or anyone else who would benefit from the sale of the property.
FHA has also set guidelines to ensure all transfers and deposits of the Gift Funds can be verified. The gift donor and the borrower must fill out and sign what is called a “Gift Letter”. This letter states the exact dollar amount of the Gift Funds, as well as there are no requirements to pay back the Gift Funds. The funds are a gift not a loan. The letter also includes the fit donor’s name, address, telephone number, and the relationship between the gift donor and the borrower. The lender may document how the Gift Funds are transferred from the gift donor to the borrower by requiring a withdrawal receipt, copy of check, or bank statements showing the withdrawal. After the Gift Funds are received by the borrower the lender will require documentation from them as well. The borrower has the option of depositing the Gift Funds into his/her escrow or bank account. If the borrower plans to deposit the funds into the bank account then he/she will have to provide verification. The borrower must provide a bank statement showing the exact dollar amount of the Gift Funds that were deposited. The borrower may also provide a deposit slip showing that exact dollar amount of the Gift Funds, either documents will satisfy FHA Gift Fund Guidelines.
Melanie Batista
Melanie Batista
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FHA Income Guidelines
With any loan it is important for your lender to have all income documentation. There are many different forms of income that are acceptable for FHA Home Loans, such as; Retirement, Commission, Per Diem, Child Support, etc. It is your lenders responsibility to determine all income that would be sufficient for your Home Loan.
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Guidelines for FHA Home Loans
FHA Credit Guidelines follow the same guidelines as other Home Loan Programs for the most part. When applying for a FHA Home Loan your lender will review you 2 year credit history. They will verify that you have paid your debts as agreed will all creditors. If for some reason you have derogatory credit Home Town Mortgage may be able to help remove that.
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You Have Questions? We Have Answers!
We know that not all borrowers understand how credit works and that's what Home Town Mortgage Services is here for. Our Loan Officers at Home Town Mortgage are FICO Pro Certified which means they specialize in credit. They can answer any question you have and are eager to do so!
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Educate Yourself!
Home Town Mortgage Services takes pride in our borrowers. We want to make sure that our borrowers make educated decisions when it comes to the Home Loan that fits them best. That is why we provide our borrowers with the tools they need to be educated about the Alabama Home Loans that are available to them.
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