How much money do I need           

The borrower's cash investment in the property must equal a minimum of Three Percent (3%). All funds must be verified from acceptable sources. If you do not have a down payment saved, please see the section on "Where to Get Down Payment Money".

Understanding where you can get money for your down payment will help you when your are ready to apply for your FHA loan.

Acceptable sources of these funds include:

Earnest Money Deposit:  If the amount of the earnest money deposit exceeds 2% of the sales price or appears excessive based on the borrower's history of accumulating savings, the deposit amount and source of funds must be verified.  Otherwise, satisfactory documentation includes a copy of the borrower's canceled check or verification from the bank.

Savings and Checking Accounts:  The lender must verify these accounts.  The borrower will need to provide the last three most recent bank statements.  If a large increase in deposits is present or the account was recently opened, an explanation and verification of the source of the deposit must be established.  Non-sufficient funds, bounced checks, or account overdrafts will need to be reasonably explained.

Gift Funds:  An outright gift is acceptable if it is from:

1) a relative of the borrower,

2) the borrower's employer or labor union,

3) a charitable organization, or

4) a governmental agency or public entity that has a program established to provide homeownership assistance to low and moderate income families. 

No repayment of the gift may be expected or implied.  Furthermore, a gift letter signed by both the donor and the borrower stating the amount of the gift and that repayment is not required, provides the donor's name, address, phone number, and relationship to the borrower will be required.  In addition, verification of the transfer of funds from the donor's account to the borrower's account, via copies of the donor's canceled check, for example, and the borrower's deposit slip or bank statement will be necessary.

1) copy of the bill of sale or HUD-1 Settlement Statement (for the sale of a home),

2) copy of the check or verification of funds transfer from the buyer of the asset to the borrower, and

3) copy of the borrower's deposit slip or bank statement showing the deposit of the funds into the borrower's bank account.

Rent Credit:  If the portion of a borrower's current rental payment is to be used to purchase the property the borrower currently occupies, the borrower will need to provide a copy of the rental/lease agreement showing an option to purchase with the clause stating how much of the rental payment is to be used as a rent credit.  It is the lender's responsibility to show that the rent payment is above FHA's estimate of fair market rent.  If the rent paid by the borrower is less than fair market or if the seller has agreed to permit the borrower to occupy the property rent-free, this amount must be deducted from the sales price as a sales concession before determining the borrower's maximum insurable FHA loan amount.

Seller/Lender/Realtor Credits: In a purchase transaction you will not only have your required down payment, but you will also have closing costs that need to get paid. To limit the total amount of funds that the borrower needs to bring to the table, the seller/lender or Realtor can agree to pay all or a portion of the borrowers closing cost. The combination of the seller/lender/Realtor credits may not exceed 6% of the purchase price for the borrower points, discounts, closing cost and/or prepaid items. The six percent is in total and not per entity. Neither of these parties may contribute any money towards the buyer’s required 3% down payment.