Today we will discuss the topic of FHA gift money for homebuyers looking to purchase a home in Atlanta and the rest of Georgia via FHA or FHA 203K renovation financing.
Gift money for an FHA loans can be used to cover the down payment and closing costs.
Acceptable places to receive FHA Gift money from:
- Family Member
- “Documented” Close Friend
- Employer
- Church
- Non-Profit
Non-acceptable places to receive FHA Gift money from:
- FHA Lender
- Seller
- Agents / Loan Officers
- Any other party involved in the purchase transaction
- Business partner
Allowable FHA closing costs range from 3 – 6% of the purchase price, depending on the size of the loan. Since FHA allows the seller to pay closing costs of up to 6%, it is highly likely that a borrower can have enough money to cover costs and buy a lower interest rate with the properly negotiated FHA deal.
Per 2009 Georgia FHA guidelines, the minimum down payment requirement on an FHA loan is 3.5% of the purchase price.
Frequently asked questions about FHA Gift Money:
Q: What is the maximum amount of gift money that a borrower can receive?
A: There is no maximum other than the 6% of the purchase price limit.
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Q: Does the borrower have to pay the gift money back?
A: No, then it is not a gift, it is a loan. Donors must complete paperwork stating no expectation of repayment.
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Q: Just to clarify, can a borrower receive enough gift money to cover all closing costs and down payment, essentially allowing the borrower to move into a new property with no money down?
A: Yes
Read all of our FHA advice to prepare yourself for your FHA purchase transaction!
APPLY NOW for FHA 203K Renovation Financing!
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