A Texas license holder is helping a buyer obtain an FHA loan. The buyer wants to use gift funds from a parent for the 3.5% down payment. Under FHA guidelines, which of the following is TRUE about using gift funds in a Texas FHA transaction?
Correct Answer
A) Gift funds from a family member can cover the entire 3.5% down payment, provided there is a proper gift letter documenting the funds are not a loan
FHA allows the entire 3.5% minimum down payment to come from gift funds provided by a family member. The donor must provide a gift letter confirming the funds are a gift, not a loan. In Texas, the deed of trust is signed by the borrower(s) and their spouse if homestead property.
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Related Concepts
An adjustable-rate mortgage (ARM) has an interest rate that changes periodically based on market conditions, typically after an initial fixed-rate period. The rate adjustment is tied to a financial index plus a margin.
Closing costs are the fees and expenses paid by the buyer and seller at the closing of a real estate transaction, beyond the purchase price. They typically range from 2-5% of the purchase price.
A conventional loan is a mortgage that is not insured or guaranteed by a government agency such as the FHA, VA, or USDA. It is originated and funded by private lenders and may be conforming or non-conforming.
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