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Using Gift Funds As A Down Payment For an FHA Mortgage

Posted on April 22, 2015 by Ray Williams.

So you are ready to buy a house, and unsure where the down payment is going to come from. You have enough money saved, but then your family tells you they will help you with the down payment. Is this something that will work? If it does, that sure would help!

Well the answer is simple, and that is yes. To a point. Meaning, they have to be a family member, domestic partner, fiancé. So it can’t be your buddy down the street.

How do they give you the money for the down payment on the FHA mortgage? Well when you talk to your lender you may get different accounts of how to do this. In my opinion, if I were getting gift funds to buy a house, I would have them give it to me before I started shopping for a home. This can help to cut down on the paperwork. You see they will have to sign a gift letter saying they don’t expect repayment of the money. Also, from there the giftor will need to supply their bank statements or a letter from a personal banker that the money was in their account. From there, we get the paper trail showing you have received the money.

Bear in mind, if you are under contract when all of this happens, it can add stress. You see the underwriters have to show you have physically received the money in your account and it is available to use before closing. So now you may understand why I say do this before shopping for a home.

Getting a gift for down payment on an FHA mortgage can be a great thing! Just make sure to bring it up to your lender early in the process.

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