FHA mortgages allow for the full downpayment to be a gift.

Currently, FHA mortgages require a 3.5% downpayment from a buyer, in addition to local closing costs, including transfer taxes, mortgage costs, title company and local charges, and possibly other closing costs.

What many FHA homebuyers may not know is that the 3.5% downpayment can be in the form of a gift from a relative, employer, fiance’ or fiancee’, close friend (which your loan officer can help define,) or a charitable organization.

Buyers may have heard that a seller can contribute money towards closing costs, but that cannot go towards the downpayment. That can only go to the closing costs above the 3.5%, and, buyers should be aware that sellers do not always contribute towards closing costs. That is a negotiated part of a contract.

In terms of a gift for the downpayment, it has to be a gift, not a loan, and there has to be a letter written from the person giving the gift, stating that there is no repayment expected, and account information as from where the money will be transferred. Many times, the buyer’s lending bank will require a bank statement from the person giving the gift showing the funds coming out of their account, and then from the person getting the gift, that amount being deposited into their account. (Thank you to The Mortgage Reports website for details on this for buyers and those giving them the monetary gifts to understand.)

For more information about buying a home in Baltimore and surrounding areas, please contact me. I would be happy to help!