Acceptable Sources of Borrower Funds

General Information on Acceptable Sources of Borrower Funds
Contents:

a. Closing Cost and Minimum Cash Investment Requirements

b. Acceptable Sources of Borrower Funds

Change Date

March 24, 2011

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5.B.1.aa. Closing Cost and Minimum Cash Investment Requirements

Under most FHA programs, the borrower is required to make a minimum downpayment into the transaction of at least 3.5% of the lesser of the appraised value of the property or the sales price.
Additionally, the borrower must have sufficient funds to cover borrower-paid closing costs and fees at the time of settlement. Funds used to cover the required minimum downpayment, as well as closing costs and fees, must come from acceptable sources and must be verified and properly documented.
References: For more information on

• settlement requirements, see HUD 4155.1 5.A, and
• acceptable sources of borrower funds, see HUD 4155.1 5.B.1.b.

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5.B.1.bb. Acceptable Sources of Borrower Funds

The table below lists the acceptable sources of borrower funds and a reference for locating additional information on each source.

Acceptable Source of Funds	Reference
Earnest money deposit Savings and checking accounts Cash saved at home Cash accumulated with private savings club	See HUD 4155.1 5.B.2
Savings bonds IRAs 401(k) and Keogh accounts Stocks and Bonds Thrift Savings Plans	See HUD 4155.1 5.B.3
Gift Funds	See HUD 4155.1 5.B.4 and HUD 4155.1 5.B.5
Sales proceeds Sale of personal property Commissions from sale Trade Equity Rent Credit Sweat Equity	See HUD 4155.1 5.B.6
Collateralized loans Grants and loans	See HUD 4155.1 5.B.7
Employer’s Guarantee Plans Employer Assistance Plans	See HUD 4155.1 5.B.8