• Their own money or money obtained from the sale of assets.
• Withdrawals from borrower’s savings or retirement account are acceptable.

Lenders will be required to verify the source of all funds prior to closing. A verification of deposit, along with the most recent bank statement, may be used to verify savings and checking accounts. If there is a large increase in an account, or the account was opened recently, the lender must obtain a credible explanation of the source of those funds. Such documentation must be provided in the FHA case binder. Failure to provide the necessary documentation may result in a notice of rejection and delay of endorsement.

• Loan discount points
• Interest rate buydowns
• Closing cost assistance
• Builder incentives
• Seller contributions or seller financing
• Credit card advances
• Secured or non-secured loans from another asset (car, home equity)

Borrowers may not obtain a bridge loan (also known as gap financing) or engage in other interim financing methods to meet the monetary investment requirement or payment of closing costs needed to complete the purchase transaction. This restriction includes subordinate liens, personal loans, cash withdrawals from credit cards, seller financing and any other lending commitment that cannot be satisfied at closing.

To avoid cases of property flipping, lenders must take steps to ensure that:

• Only current owners of record may sell properties that will be financed using FHA-insured mortgages;
• Any resale of a property may not occur 90 or fewer days from the last sale to be eligible for FHA financing; and
• For resales that occur between 91 and 180 days where the new sales price exceeds 100% of the previous sales price, FHA will require additional documentation validating the property’s value.

If a lender suspects a senior has become a victim to a property flipping scam, the Processing and Underwriting Division of the local HOC should be contacted.