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FHA home loans are insured loans that allow a consumer to purchase a home with a minimum down payment of 3.5 percent of the total sales price. However, in an effort to reduce fraud, The Department of Housing and Urban Development stipulates several requirements to consumers’ bank account balances upon closing. -
Prior to closing a home, a home buyer must show proof of funds for closing costs, prepaid items (such as property taxes and home owners insurance) and at least a full mortgage payment on top of it. Without the available funds to close, the lender will not give final approval, and the purchase contract can be canceled. -
FHA loan applicants can receive funds as a gift from family members to help them with their down payment and all closing costs. There is no limit to the amount of the gift that they can receive, but FHA does require that the gift funds be sourced. The family member giving the gift has to provide bank statements proving that they had the funds and write a gift letter bestowing the financial gift to the recipient. Once the funds are received by the loan applicant, they must be verified again prior to closing. -
If the seller of the property opts to assist the buyer with closing costs, this can also reduce the required amount that FHA will need to see in the buyer’s bank account at the end of the transaction. Sellers can contribute as much as 6 percent toward closing costs, however, none of that can be applied to the buyer’s down payment. The down payment has to come from the buyer’s own resources or be received as a gift from a family member.
Bank Account Balances Matter
Funding Sources
Seller Contributions
