What percentage of the funds needed at closing can be a gift, according to FHA regulations?

Under FHA regulations, a borrower is allowed to receive a gift to cover 100% of the funds needed at closing. This means that the entire amount required for the down payment, closing costs, and any other associated fees can be sourced from a gift, as long as it follows certain guidelines.

The FHA recognizes that many borrowers, especially first-time homebuyers, may have financial constraints that make it challenging to save for a down payment. By allowing a full gift for closing costs, the FHA aims to facilitate homeownership and make it more accessible. The requirements stipulate that the funds must come from acceptable donors, such as family members, and the donor must provide a gift letter confirming that the funds do not need to be repaid.

This flexibility is critical in helping more individuals qualify for a mortgage, promoting the overall goal of increasing homeownership rates.