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Approved Sources of FHA Gift Funds A close friend. The borrower's employer or labor union. A charitable organization without tax exempt status. A government agency or public entity that has a program providing home ownership assistance to low- and moderate-income families, or first-time home buyers.
A mortgage gift letter must include: Donor's name and contact information. Address of property being purchased. Donor and buyer's relationship. Gift amount. Date of gift transfer. A statement that repayment isn't expected by the donor. Donor's bank, account number, and type of account. Donor's signature.
Gift funds are monies given to a borrower to help with a home purchase. For FHA loan approval, borrowers can use the gift funds for a down payment, closing costs, or reserves needed for approval.
How much of a home down payment can be gifted? For both conventional and FHA loans, the total amount of the down payment can be gifted, in most cases. FHA loans require a minimum of 3.5 percent down with credit scores greater than or equal to 580. For credit scores between 570 and 500, FHA requires 10 percent down.
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