Acceptable Sources of Gifts For An FHA Loan
Borrowers who are looking into getting an FHA loan often ask about what are the acceptable sources of gifts for an FHA loan. They ask because they really would like to buy a home but lack a down payment. Some ask to make sure the gift they expect to get will be okay for them to use.
FHA is a great loan option for a borrower who may be using a gift for their down payment. All of the money a borrower needs to put down can come from a gift.
So what are the acceptable sources of gifts for an FHA loan?
Eligible sources include:
Ineligible donors include:
Gifts no matter the source must be a true gift without an obligation for repayment by the recipient. They must also be fully documented which doing properly and completely is very important. Where the money came from, proof that it was deposited into the borrowers account and a signed gift letter briefly describe what is needed to document the gift for the loan. We should talk about the possibility of a gift as early as possible, certainly before a transfer has been made at the bank.
Gifts can open the door of home ownership to many people. If you have any questions on acceptable sources of gifts for an FHA loan please call me at 860-306-8029!
Photo from http://www.flickr.com/photos/amagill/
A great question was posed by Carla Muss-Jacobs the questions that I want to add to the article to answer it. Are there gift limits. There are no limits from FHA on the amount of gift in a transaction. All of the money a borrower needs for either down payment or closing cost may come from an acceptable source. How does this play with the IRS stipulations on taxable gifts in a tax year? How a gift impacts either the doner or recipient and their tax obligations is a question for a qualified tax professional.
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As quoted in the New York Times "A Little-Known Loan Program", and in the Hartford Courant "Moving In:Couple Combining Households Buys In Newington" and "Moving In... New Britain"