Down Payment and Source of Funds Requirements

Generally a borrower must have a minimum of 5% down on a purchase that can be verified from acceptable sources. The only exception are for first time home buyers, 100% financing (such as VA loans) and FHA financing (3% down). Acceptable sources of funds include checking/savings accounts, money from IRA’s and Keogh accounts, sale of assets, stocks and other investments and borrowed funds against a secured asset (i.e. car, real estate, life insurance, etc.). FHA, in addition, permits gifts from family members, non-profit agencies, or government agencies as well as the aforementioned sources.   However, not acceptable sources of funds include the following: cash on hand, proceeds from a personal or unsecured loan, cash advance from a credit card, or any cash for which the source cannot be verified. 

Recently FNMA and FHLMC are offering flexible first time home buyer programs which permit a borrower to use funds from a gift, a loan, cash advance from a credit card, or cash on hand.