Every now and then, someone will ask me “is it okay if I ______________ to pay for my closing costs?” So I thought I would outline what most lenders will accept as an acceptable source of funds for closing costs and/or down payment when getting an FHA loan.
Remember: no matter what funds you plan on using, they are going to have to be documented as to the source of the funds.
Acceptable Sources of Funds For FHA Loans
- Checking/Savings Accounts/CDs
- Lease to Own/Rent Credit with Option to Purchase
- Interested Party Contributions (subject to limitations)
- Loan Repayment Proceeds (with appropriate and acceptable paper trail)
- Corporate Relocation Buyout
- Relocation Benefits
- Use of Business Funds (as per policy and if allowed by underwriter)
- Disaster Relief Grant or Loan
- Non-Traditional Savings Plan/IDA Accounts
- Employer Assistance
- Gifts
- Gifts-Pooled Funds
- Gifts of Equity
- Gifts/Grants from Non-Profit
- Gifts – Wedding
- Retirement Accounts
- Proceeds from Sale of Home
- Sale of Assets
- Government Bonds
- Stocks/Securities
- Inheritance
- Trade Equity
- Land Equity
- Trust Account
- Life Insurance Net Cash Value
- Bridge/Swing Loans
- Income Tax Refunds
- Saving Funds to Close
- Gambling or Lottery Winnings (this is my favorite one)
- Lawsuits or Insurance Settlements
- Borrowed Funds Secured by an Asset
- Financing Concessions
- Cash-on-Hand
Whew. Sure, there might be more places that you could possibly come up with for a down payment / closing costs – but there are probably about 99% of all of the ones I have seen. Have questions about where your down payment can come from when getting an FHA loan? Be sure to ask your loan officer.
