FHA down payment gift question...?

I'm in the process of buying a house. My parents told me they would pay for my down payment in the amount of $3500 (3.5% of total price). The problem is, is that I was approved for the loan today and they asked about the source of my down payment. They said I had to show proof of it going from my their account to mine. Well they just happened to have the money cash at home. So theres no way to trace it. From what I've "googled" it appears to have to be in an account for around 30 days or so and we're supposed to close in about 15 days. So its not possible. I'm going to try and talk to the lender on monday but I'm slighlty OCD and need info NOW. lol. So any help on whether it would even be possible for this to work would be appreciated or if cash from one hand to other is even possible. When they see the deposit in my account they'll want to know where it came from. Well it came from my parents home and theres no proof beyond that. I'm just worried that I've wasted weeks of mine and my realtors time!


No there is nothing fishy! The money was in a lock box at home. I live in southern Louisiana. It was money for hurricane emergency and now that hurricane season is practically over they wont need it till next year and have time to prepare again if they give it to me. But I did read it had to be "seasoned" like sitting in an account for a while. The rules are stupid because there is no way they can trace money where it came from anyway. Its almost as if theyre trying to make it impossible.

Update 2:

Well Teran that is not how they save money. They do have checking and savings but what good would it do if you have ALL your money in an account then a repeat of hurricane Katrina/Rita come through and knock out the power for weeks and you have no way to run credit/debit cards. We had that problem before. It's not fun. Not that the season it over than can save the money back up. Had I'd known the EXACT house/price/payment etc I'd just had them do all that months ago and there would be no problem. Basically the webiste just says it can be gifted so that how I took it and it really doesnt make any sense. If I wanted to gift my brother some money and take out a loan to do it and "I" pay for it then thats my business and it wouldnt affect him. But anyway I'm doing a USDA loan and I'll just use the money to help upgrade the house. Thanks for the answers everyone!

4 Answers

  • Anonymous
    1 decade ago
    Favorite Answer

    your lender should have a gift letter from HUD that your parents will need to fill out. what they should do is deposit this cash into their bank account. then they need to take that letter to their bank and have their bank notorize it. then they write you a check. make a copy of that check. deposit the check into your account. then mail the copy of the check and the gift letter back to your lender.

    the 30 days thing isnt that big of a deal. just do the above and youll be fine. i just went through this myself.

  • 1 decade ago

    FHA allows for your down payment to come from your parents. They don't allow it to come from a loan from someone else. There is no proof that this money came from your parents - even the letter from them.

    Typically what is wanted is proof that the money had been in their account for some time, then they withdrew it and deposited it in your account. This paper trail does not exist now,

    The lender MIGHT accept a letter from your parents saying this is "mattress money". That's the term for money saved at home instead of in a bank. Is that how your parents keep all their savings? They have no checking or savings accounts? Then it's believable... otherwise, you might not get it approved.

  • 1 decade ago

    Not a problem at all. What your parents will need to do is write up a "Gift Letter". Basically this letter will state that they gave you this money as a gift and you do not have to pay it back. The mortgage co. wants to make sure that you did not get a loan somewhere else and will have payments. This happens all the time, you are not the first one.

    In fact I had to do this very thing when we bought our first house. Don't sweat it. By the way

    the income tax credit has been extended until June of next year, so great for you!

  • Leo F
    Lv 5
    1 decade ago

    Your problem is there is no paper trail and without a paper trail there is no deal. How would HUD /FHA know its not illegal money or a personal loan you borrowed. If its on the up and up then just have your parents write you a check and you deposit into your bank account. Something sounds fishy to me

    Source(s): Certified FHA appraiser
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