Many Arizona FHA home buyers have everything they need except for the down payment required to purchase a home. One of the great features of an FHA mortgage is that Phoenix area buyers are allowed to receive a gift from a family member.
If a Arizona FHA home buyer is going to receive a gift for their down payment and/or closing costs, there are a few simple steps that FHA/HUD require every FHA mortgage lender take the borrower through in order for the gift funds to be allowed.
FHA Home Loan – Getting a Gift
1. Document the donor had the funds available to donate to the buyer
2. Document the transfer of the funds from the donor to the buyer
3. Document the buyer’s deposit of the gift funds into their posession
4. Have the borrower and donor execute an FHA/HUD approved gift letter – FHA Gift Letter Sample
To take care of item #1 we typically request a copy of the donor’s bank/asset statement from the account that the donated gift funds will come from. In order to help protect the donor’s privacy, I suggest this document be emailed or faxed directly to your Arizona FHA Mortgage Lender (my team) rather than going through the borrower.
There are a few different options to tackle #2. Your loan officer can obtain a copy of the check/money order that the donor used to give the buyer the gifted funds. We can also have the donor wire the gifted funds directly to the Title Company that is handling the buyer’s purchase. Per FHA/HUD mortgage guidelines, we would just need to provide a copy of the incoming wire from the Title Company showing that the funds were sent from the donor’s account (the account documented in step #1). After you read how to take care of #3 you will see that wiring actually kills two birds with one stone.
A buyer can also handle #3 in a couple of different ways. If the gifted funds are transmitted with a check or a cashiers check, the buyer can provide a copy of their bank statement showing that the gifted funds have been deposited AND that they have cleared the account. NOTE: “Pending” deposits will not satisfy FHA/HUD guidelines. On the other hand, if the gifted funds are sent with a wire to the Title Company, we can essentially skip this step. The wire confirm from Title will show that the funds are now in the buyers posession.
Step #4 is easy! Buyer and donor need to fill out the FHA gift form (see sample above) and that is it!
By Jeremy House