Everyone Thinks Closing Cost Money Has to Be Your Own. Kathryn Found Out That's Wrong
Everyone tells buyers the only money you can use to purchase a home is money that sat in your own bank account for months. Kathryn believed that completely. She was buying a place near Tybee Island, GA, and when her employer mentioned a homebuyer assistance benefit during open enrollment, she brushed it off. It had to be a mistake, or something that only applied to other kinds of purchases. She figured the mortgage would only accept money she had saved and seasoned herself.
What Most Buyers Get Wrong About Employer Assistance
This assumption is common, and it is not based on anything written in the guidelines. It comes from the general idea that lenders are suspicious of money appearing suddenly from an outside source. That suspicion is real for certain kinds of funds, but employer assistance programs are specifically carved out as acceptable.
A situation that comes up often is a buyer with access to a legitimate workplace homebuying benefit who never mentions it to their loan officer, simply because nobody asked and nobody explained that it might be usable. The money sits unused, and the buyer brings more of their own cash to closing than they needed to.
The Actual Rule, Word for Word
Fannie Mae's Selling Guide, section B3-4.3-05, lays out the standard for conventional loans:
"Employer assistance programs that provide funds for closing costs or down payment are acceptable. The assistance must be verified and may not require repayment."
That is the entire requirement. Two conditions. The funds have to be verified, and they cannot be structured as a loan the buyer pays back. There is nothing in there about how long the buyer has held the funds, because the buyer never holds them in the traditional sense. The employer provides them directly toward the transaction.
How Kathryn Made Her Benefit Usable
Once Kathryn learned her employer's benefit could apply to her closing costs, the next question was how to document it so it would pass underwriting cleanly. The answer was straightforward. She asked her HR department for a letter on company letterhead confirming two things: that the assistance was a gift, and that it carried no repayment obligation. That letter is what allows the funds to be verified under B3-4.3-05.
No bank statements tracking the money for two months. No explanation letter about a large deposit from an unfamiliar source. Just a letter from HR stating plainly what the money is and that it does not need to be paid back.
What to Do If Your Employer Offers a Homebuying Benefit
If you have access to any kind of employer homebuying assistance, do not assume it is off limits for your mortgage. Ask two questions: does the program provide funds toward closing costs or down payment, and can HR confirm in writing that it is a gift with no repayment requirement. If the answer to both is yes, that benefit is very likely usable on a conventional loan.
I am Jason Sharon, a licensed mortgage broker with Home Loans Inc, and I ask every conventional buyer about employer assistance upfront, because too often it gets left on the table simply because nobody brought it up. If you want to find out whether a benefit you have access to can go toward your closing costs, call me at 843-569-7283 and I will walk you through exactly what documentation you need.
Learn more about this loan program: Everyone Thinks Closing Cost Money Has to Be Your Own. Kathryn Found Out That's Wrong
