FHA and Gifted Funds

Believe it or not, with all of the fraud in FHA, it is no wonder that they have asked that gifted funds be documented every step of the way. FHA and gifted funds do get along, but it does have some strings attached.




With FHA priding themselves on commonsense lending, they also consider it commonsense that the person gifting you funds is logic; meaning a parent, sibling or other close relatives. FHA will allow other sources to fund you, but it has to make sense. In some circumstances it would be an employer or a close friend or current roommate, but FHA’s guidelines on gifted funds simply state it needs to be verified.



The reasoning behind verifying the gifted funds makes perfect sense. The lender knows that statistically speaking those who enter into a transaction with no invested funds are more likely to default on a loan, so it is in the best interest of all involved for FHA to verify gifted funds.



Many times the buyer may take it personal, but it really isn’t meant to invade your privacy, but understand that FHA has already allowed for low down payment funds up front. They only now ask for as little as 3.5% down so there isn’t a huge out of pocket needed depending on how much you are spending.



The fact that FHA allows gifted funds is a gift in itself. This is something you would be hard pressed to do on a conventional loan, so beware.



For more information on FHA and gifted funds, please visit my website at www.fhaloansnow.net.



-Mayer Dallal