Can employers contribute toward the borrower's down payment?

Employer Assistance refers to benefits provided by an employer to relocate the Borrower or assist in the Borrower’s housing purchase, including closing costs, Mortgage Insurance Premiums (MIP), or any portion of the Borrower’s Minimum Required Investment (MRI). Employer Assistance does not include benefits provided by an employer through secondary financing.  A salary advance cannot be considered as assets to close. 

RELOCATION GUARANTEED PURCHASE
The Mortgagee may allow the net proceeds (relocation guaranteed purchase price minus the outstanding liens and expenses) to be used as cash to close.  If the Borrower is being transferred by their company under a guaranteed sales plan, the Mortgagee must obtain an executed buyout agreement signed by all parties and receipt of funds indicating that the employer or relocation service takes responsibility for the outstanding mortgage debt.  The Mortgagee must verify and document the agreement guaranteeing employer purchase of the Borrower’s previous residence and the net proceeds from sale.   

EMPLOYER ASSISTANCE PLANS
The amount received under Employer Assistance Plans may be used as cash to close.  The Mortgagee must verify and document the Borrower’s receipt of assistance. If the employer provides this benefit after settlement, the Mortgagee must verify and document that the Borrower has sufficient cash for closing.   

For additional information see Handbook 4000.1 II.A.4.d.iii(M) or II.A.5.c.iii(M) available at https://www.hud.gov/program_offices/administration/hudclips/handbooks/hsgh

All policy information contained in this knowledge base article is based upon the referenced HUD policy document. Any lending or insuring decisions should adhere to the specific information contained in that underlying policy document.


Topic Number: KA-04233