USING GIFT OF EQUITY WITH AN FHA MORTGAGE TO PURCHASE FROM A RELATIVE
Do FHA Mortgage Lenders Allow Gifts Of Equity? YES! Only Family Members may provide gift of equity credit as a gift on property being sold to other Family Members. Under the following conditions:
GIFT OF EQUITY FHA MORTGAGE LENDERS APPROVALS WITH MINIMAL DOWN PAYMENT AND CLOSING FEES:
- Gift of equity from family up to 15% the purchase price.
- Gifts from family or FHA Grants for down payment assistance and closing costs OK!
- No reserves or future payments in account required.
- FHA regulated closing costs.
- Read more about buying a home with an FHA mortgage Bad Credit –No Credit – Investment –Second Home –Multi Family –
GIFT OF EQUITY FHA MORTGAGE LENDERS MAKE QUALIFYING EASIER BECAUSE YOU CAN PURCHASE:
- 12 months after a chapter 13 Bankruptcy FHA mortgage Lender approvals!
- 24 months after a chapter 7 Bankruptcy FHA mortgage Lender approvals!
- 3 years after a Foreclosure FHA mortgage Lender approvals!
- No Credit Score FHA mortgage Lender approvals!
- 580 required for 96.5% financing or 3.5% down payment FHA mortgage Lender approvals.
- 500 required for 90% financing or 10% down payment FHA mortgage Lender approvals.
- Bad Credit with minimum 500 FICO credit score with 10% Down Payment FHA. For FHA mortgage applicants with credit scores between 500 and 579 must make down payments of at least 10% down!
- Read more about FHA Qualifying Qualification Summary – Manual Underwrite – Collections-Judgement’s – Bankruptcy or Foreclosure – Compensating Factors –
GIFT OF EQUITY FHA MORTGAGE LENDERS ALLOW HIGHER DEBT TO INCOME & EASIER JOB QUALIFYING
- FHA allows higher debt ratio’s than any conventional mortgage loan programs.
- Less than two years on the same job is OK!
- Self-employed buyers can also qualify with FHA Mortgage Lenders.
- Read More about Gifts For Down Payment – Documents Checklist – Debt To Income – Student Loans –
The FHA Lenders require a gift letter signed and dated by the donor and Borrower that includes the following:
- The donor’s name, address, telephone number of the donor;
- The donor’s relationship to the Borrower;
- The dollar amount of the gift; and
- The FHA letter must be signed stating that no repayment is required.
USING THE FHA MORTGAGE GIFT OF EQUITY TO BUY FROM FAMILY MEMBERS- FHA mortgage lenders require that when you purchase a house from family members the loan amount cannot exceed 85 percent of the sales price. There is no set maximum or minimum gift funds, but if the equity gift falls below 15 percent, the buyer make up the difference in cash. For example, if the purchase price is $100,000, the maximum loan amount can be $85,000. If your relative wants to get $95,000 from the deal, you must come up with the $10,000 cash difference in down payment.
GIFT OF EQUITY WHEN PARENTS ARE COSIGNING AND SELLERS OF THE HOUSE- If your parents are sellers and non-occupant co-borrowers, the maximum loan amount drops to 75 percent of the sales price. So, your parents would then have to gift 25 percent of the price or you’d have to come up with that much more money down.
YOU CAN AVOID LOWERING THE LOAN IN GIFT OF EQUITY BY DOING THE FOLLOWING:
- If one or both of your parents continue to live in the home with you, you are both on the deed and the loan to value reverts to 96.5 percent. This is normal when a parent sells to a child, who moves in with him or her.
- The other way to get a higher loan amount is if you rent the home from your relative for at least six months immediately before writing up to purchase and sale agreement. You should draw up and fully execute a lease agreement. Be prepared to document canceled checks or proof if direct wire transfer, cash payment will qualify.
FHA MORTGAGE LENDERS GIFT OF EQUITY ARTICALS
- Does HUD allow gifts of equity? Only Family Members may provide equity credit as a gift on property being sold to other Family Members. The Mortgagee must obtain a gift letter signed and dated by the donor and Borrower that includes the following
- Does FHA have cash reserve requirements?of cash taken at settlement in cash-out transactions; incidental cash received at settlement in other loan transactions; gift funds; equity in another property; or borrowed funds from any source
- Where can I find the guidelines regarding gift funds?Gifts refer to the contributions of cash or equity with no expectation of repayment. Gift Funds may be provided by: • the Borrower’s Family Member; • the Borrower’s employer or labor
- What is the FHA definition of borrower reserves?in cash out transactions • incidental cash received at settlement in other loan transactions • gift funds in excess of the amount required for the cash investment and other expenses • equity in another
- Can gift funds be provided from a friend or other unrelated party?Gifts refer to the contributions of cash or equity with no expectation of repayment. Gifts may be provided by: • the Borrower’s Family Member; • the Borrower’s employer or labor
- How is the Adjusted As-Is Value established for a 203(k) refinance transaction?; or • the As-Is Property Value. For properties acquired by the borrower within 12 months of the case assignment date by inheritance or through a gift from a family member, the mortgagee may utilize the calculation of Adjusted As-Is Value
- When can borrower cash reserves be used as a compensating factor for a manually underwritten loan?). Reserves are calculated as the Borrower’s total assets less: • the total funds required to close the mortgage; • gifts; • borrowed funds; and • cash received at closing in a cash-out