DO YOU NEED A DOWN PAYMENT FOR AN FHA LOAN?
Below are a few different options:
1. Gift funds from the borrower's employer or labor union are permitted. If the gift funds come from the borrower's employer or labor union a copy of the legal agreement that specifies the terms and conditions of the gift must be obtained. The legal agreement must establish the (a) organization has a formal gift program, (b) identify the donors mailing address, (c) state the funds are a gift and don't have to be repaid AND (d) show how the funds will be transferred.
2. FHA will permit family members (only a child, parent or grandparent) to lend on a secured or unsecured basis up to 100% of homebuyers required cash investment. Loan may not provide for a balloon payment within five years from date of execution. An executed copy of the document outlining the terms of the secondary financing must be maintained in the lender's file. Borrower must qualify with debt. The debt will be calculated into the "back end" ratio. Family member may obtain loan from own resources, but borrower can't be a co-obligor on loan obtained to give to borrower. Funds may NOT come from a party to the transaction: seller, agent, loan officer, etc.
3. Gift funds from family members
NOTE: FHA does not allow gifts from seller funded down payment assistance programs.
