Where You Can And Can’t Get An FHA Gift…

I get asked gift fund questions on FHA loans more than you would think.

Questions like…

…”Who can give a gift on an FHA loan?”

…”Who can’t give a gift on an FHA loan?”

Here are the guidelines on FHA gift giving directly from the FHA underwriting manual.

Acceptable gift donors for FHA loans…

1) Borrower’s relative.

2) Borrower’s employer or labor union.

3) A close friend with a clearly defined and documented interest in the borrower.

4) A charitable organization.

5) A governmental agency or public entity that has a program providing home ownership assistance.

Unacceptable gift donors for FHA loans…

1) The seller.

2) The real estate agent or broker.

3) The builder or an associated entity.

Gifts from these sources are considered inducements to purchase, and must be subtracted from the sales price.

An interested note on the source of funds of the donor…

As a general rule, FHA is not concerned with how a donor obtains gift funds.

This is provided that the funds are not derived in any manner from a party to the sales transaction.

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.

How about that!