Winter Haven, Florida: Get FHA Downpayment Loans from Immediate Family

Posted by Kevin Sandridge
January 7, 2009

Winter Haven FHA Loans - Downpayment Funds from Immediate Family

With Downpayment Assistance Programs (DPAs) now out of the picture, first time Winter Haven, Florida homebuyers would do well to consider a loan from an immediate family member as a source for their 3.5 percent FHA home loan downpayment requirement.

It’s amazing how few people consider this as an option, especially since the government will give homebuyers a “mini bailout” of sorts to pay back their folks!

As part of HR 3221, qualified first time homebuyers can borrow the money from their parents and repay it with the $7,500 tax credit authorized by this bill when they receive their refund.  This is really a pretty sweet deal!

FHA Guidelines Making Family Loans Possible for First Time Winter Haven, FL Homebuyers

FHA guidelines allow family members to lend up to 100% of the full amount of cash Winter Haven homebuyers need to get into a home, including the down payment.

It’s really pretty straight forward: There is no additional “cash investment” required from you as the borrower.

Here are some of the particulars:

  1. The loan can cover some or all of your down payment, closing costs and pre-paids.
  2. Only your immediate family may furnish the loan.  This means parents, grandparents, or children – including legally adopted and foster children.
  3. The loan can be unsecured or secured against the subject property. The lien on the property has to consist of the family member lending the funds – not a third party.
  4. Your immediate family member may borrow the funds, for instance, from their bank.  They may even use their home as collateral.  However, the bank can’t place any sort of lien on your FHA-funded property.  In addition, you may not sign the note they use to secure the money to lend you.
  5. Your immediate family member cannot get the funds they will be lending to you from any person who stands to have a financial interest in your FHA-funded property.
  6. Payments, if applicable must be included in the debt ratio.
  7. No balloon payments can be due within 5 years.
  8. The Combined Loan to Value Ratio (Your mortgage + the family loan / the home’s total value) MAY exceed 100% of the sales price (or value) of the property, as long as you don’t receive any money back at closing aside from your earnest deposit.
  9. The first mortgage loan amount calculations are not affected.
  10. A copy of the documentation is required before approval, and the executed paperwork must remain with the loan file. This is for informational purposes only. Refer to Mortgagee Letter 96-58, and HUD Handbook 4155.1 REV-5, 1-13.E. for full details)

As in nearly all cases, these FHA guidelines can sometimes read a bit like a foreign language.  Don’t worry… that’s why I’m here to help.  If you’re considering a Winter Haven, Florida home purchase using an FHA loan, give me a call at 863-604-3019.  We’ll go over your financial situation and make sure things are in order.

Apply for a Florida FHA Home Loan Today

Kevin Sandridge
The Florida Mortgage Pro
Signature Home Funding
410 Laurel Cove Way
Winter Haven, FL, 33884
Mobile: 863-604-3019
Fax: 888-496-0265
kevin.s@sigfunding.com
Building effective relationships one step at a time…

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