Allowable Sources for Your Escrow Account
July 28, 2026
Sources That Satisfy Federal Housing Administration Escrow Guidelines
Buyers can use checking or savings accounts, liquidated investments, retirement accounts, asset sales, or housing grants. Gift funds from eligible sources also meet the loan criteria of the lender and the FHA.
When the Lender Will Verify Escrow Money
Verification happens if/when an earnest money deposit exceeds 1 percent of the purchase price. Lenders also inspect deposits that exceed a borrower's customary account balances. Verification demands bank records, written statements from deposit holders, or copies of canceled checks.
Documentation Needed
Lenders examine bank statements covering two full months. Statements must display the account holder name, account number, and transaction history. Unexplained cash deposits require written proof of origin, or else the lenders may discard those funds from available cash tallies.
Using Retirement funds or Investments
Borrowers may sell stocks, bonds, mutual funds, or certificates of deposit to fund escrow. Retirement withdrawals from 401(k) plans, pensions, or IRAs are also acceptable if account terms permit loans or cash distributions.
Acceptable Gift Fund Sources for Escrow
Approved donors include relatives, spouses, employers, labor unions, close friends, charitable groups, and state or local housing assistance programs. The seller, real estate broker, builders, and lenders cannot provide these funds because they have a financial stake in the outcome of the transaction.
Details to Include in Your Gift Letter
A gift letter must contain the donor's name, physical address, phone number, relationship to the buyer, and exact dollar amount. The letter must state clearly that the borrower has no repayment obligation.
Personal Property Sales for Escrow
The buyer must supply a formal valuation of the item sold, a bill of sale, payment receipts, and bank deposit records.
FHA Loan Articles
July 28, 2026FHA loan rules require escrow, and the funds used to fund escrow must come from approved sources. FHA loan rules require the lender to verify funds for earnest money or closing costs and will not allow sources such as payday loans, credit card cash advances, or non-collateralized loans. If you have never opened an escrow account before, there are some important details to know before you start.
July 20, 2026Escrow accounts play a central role in managing property taxes and insurance for FHA mortgages. Understanding escrow accounts is an important part of being a new home owner, especially if you have plans to refinance the property at some point and want to know your options to get out of escrow. We examine some key points here about revising and canceling escrow on an FHA mortgage.
July 18, 2026Many home purchasers hold incorrect assumptions about FHA mortgage rules and restrictions. These loans are not limited to first-time buyers, for example, and there is no age limit for FHA loans. FHA borrowers may apply for more than one FHA mortgage, but these loans are for owner-occupied residences only. We examine some important points on these issues, including when you can and cannot have more than one FHA loan at a time.
July 14, 2026Do you need to sign a mortgage remotely? Years after COVID, using an all-virtual closing for your FHA home loan is an option, depending on the nature of your transaction and other factors. The FHA and HUD both permit digital signatures on home loans, including initial applications, tax disclosures, and purchase agreements. Keep in mind that using the digital option requires cooperation among three entities: your mortgage company, the title insurance agency, and the local land recording office.
July 9, 2026The Closing Disclosure is provided by mortgage lenders at least three business days before you close the deal. The disclosure outlines loan terms, monthly installments, and the closing costs required to finalize the transaction and take the keys to your new home. Borrowers use the disclosure to cross-reference their final numbers against the initial Loan Estimate received during the early stages of the application. But what if there are errors?
