Generally a parent or other family member can "gift" money to a buyer to use towards the down payment in the purchase of a home, regardless if it's a FHA or conventional mortgage. The earnest money payment is applied towards the down payment, so this should be OK.
The lender in the transaction will want verification and documentation from the person giving the gift, generally in the form of a "gift letter," stating that this money is being given to the buyer and not loaned to them. Check with the lender to see what documentation they will need...they will have the final say in how this money is handled between the family member and the buyer.
Kris Plechaty @ First Weber Group Realtors
Menomonee Falls, WI
The lender will have these answers for you.
FHA loans permit gifts from family members, regardless of how much the buyer is putting down. As far as paying the earnest money, you really just need to go about it the right way. The best way to do this, and avoid having to jump through additional hoops for an underwriter, is to just gift them the money and have them write the check for earnest money. If you write the check directly to the seller or realtor, then it will probably work, but you are going to potentially create a lot of extra paperwork and hassle for yourselves.
On a conventional loan, the guidelines state that they can get a gift from a family member so long as the buyer has a minimum of 5% of their own money into the transaction. But again, you would be much better off gifting them the money first as opposed to just writing the check.
This isnt to say a lender/underwriter won't approve things if you write the EMD check directly. I'm just saying from experience that this will probably create a lot of headache if you do it this way.
Take the path of least resistance and just do the gift first
Mandy Fritsche, Prospect Mortgage, Mortgage Loan Officer, NMLS# 557211
262-327-5700 Cell, 877-868-9198 Fax, firstname.lastname@example.org