When are Gift Funds Allowed?
Four Basic Requirements of Gift Funds for Down Payment Using and FHA Loan
A Description of Gift Finds; In order for funds to be considered a gift, there must be no expected or implied repayment of the funds to the donor by the borrower. To ensure there will be no future request for repayment HUD requires that the seller provide a letter attesting to the fact that it is in fact a bona-fide gift. Click here to download a sample copy.
Who may provide a gift (and who may not): An outright gift of the cash investment is acceptable if the donor is:
- the borrower’s relative
- the borrower’s employer or labor union
- a close friend with a clearly defined and documented interest in the borrower
- a charitable organization
- a governmental agency or public entity that has a program providing home
- ownership assistance to low- and moderate-income families, or
- first-time homebuyers.
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