FHA loans allow a down payment of only 3.5%. Closing costs in Gainesville can add another four to six percent of the loan amount based on the size of your loan. So all in all, you will need about 7.5% to 9.5% of the purchase price to close; however your Landmark Mortgage Planner has ways to help you lessen this burden, if cash to close is an issue for you.

Gifts are one way we can help cut the amount of cash you will need for your FHA loan. The gift must be from a relative or someone that we can show a close relationship to like a fiance. There are no limitations as to the amount of the gift, so the donor is allowed to pay for the entire down payment and all closing costs. The underwriter will require a verification from the giver’s bank to document the source of the funds as well as a gift letter.

We will have to show the source and provide proof that the money has been there for at least 2 months, regardless of where the money comes from. The underwriter will check for any deposits that are not payroll related; so if you sell the car (or make other deposits other than your normal paycheck), make sure that before make the deposit, you thoroughly document the transaction. A good way to be sure you don’t miss anything is to keep a paper trail for any deposits that go into your account. So in the example of the car sale you would need a copy of the check from the buyer, a copy of the title, and the deposit slip. This documentation is required by federal law to cut down on mortgage fraud and money laundering.

Grants and assistance programs are another source of funds for closing costs and down payment. Check with a Landmark Mortgage Planner to find out what programs can work for you.

Seller concessions are when the seller pays some or all of your closing costs for you. FHA loans allow seller concessions up to six percent of the sales price of the home. It is pretty common to ask for closing costs from the seller, especially on an FHA loan in today’s market. So don’t feel like you are presenting a weaker offer if it includes closing costs from the seller. Since you are asking the seller to decrease the price you are offering by the amount of the closing costs, you may want to modify the offering price to be competitive particularly if there is more than one offer. Although you may have the cash to pay for closing costs yourself, it’s smarter to ask for the seller concession anyways because then you can keep some cash in your pocket after closing.

Consult a Landmark Mortgage Planner to learn other ways that we can help reduce the amount of cash needed to close.