FHA Downpayment
A borrower's downpayment may come from a number of sources. The 3.5% requirement can be satisfied with the borrower using their own cash or receiving a gift from a family member, their employer, labor union, or government entity. Since 1998, non-profits have been providing downpayment gifts to borrowers who purchase homes where the seller has agreed to reimburse the non-profit and pay an additional processing fee. In May 2006, the IRS determined that this is not "charitable activity" and has moved to revoke the non-profit status of groups providing downpayment assistance in this manner. The FHA has since stopped down payment assistance program through 3rd party non profits. There is a bill currently in congress that hopes to bring back down payment assistance programs through non profits.
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