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
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