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Fannie Mae – Using a Fund Raising Platform for Down Payment & Closing Costs
Question:
Does Fannie Mae allow assets from crowdfunding websites to be used for closing costs, earnest money, or a down payment on a home? My clients are getting funds from GoFundMe.
Answer:
There is no discussion anywhere in the Fannie Mae selling guide for the use of a crowdfunding website as an eligible source of down payment, closing costs, prepaids, or reserves.
I do know that Fannie Mae (some years back) had a ‘test and learn’ pilot allowing a specific lender to offer a crowdfunding option. Still, it was limited to only one lender, and the last I heard from Fannie Mae, this pilot or ‘test and learn’ ended without any changes to the selling guides.
Some additional comments/thoughts:
- Gift Funds: If the funds from GoFundMe are considered gifts, they might be acceptable if they come from an eligible donor (like a family member). However, each gift must be documented with a gift letter, and the donor must be an eligible donor. I suspect this is very unlikely, but I’m throwing this idea out there, ‘just in case.’
- Donated Funds: If the funds are donations from entities or individuals not closely related to the borrower, this might be treated more like a grant or donation. Fannie Mae allows grants under certain conditions, but these are typically from established organizations or programs and not from a GoFundMe campaign. So, this is probably even more unlikely than my comment above.
Summary:
While there are no direct guidelines on crowdfunding, if these GoFundMe funds can be shown as legitimate gifts from eligible donors or as donations from entities that follow similar principles to grants, they might be acceptable.
However, this would require:
- Clear documentation of the source of each donation.
- Gift letters if applicable.
Verification that these funds are considered the borrower’s own funds or are from an acceptable source without any obligation to repay.
Given the ambiguity and lack of guidance, I suggest that the safest approach would be to consult directly with Fannie Mae and get their opinion in writing.
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