Sweat Equity Question 65: Can a borrower receive cash back at closing from a gift of sweat equity?
Only if the borrower s investment (earnest money deposit, POCs, etc.) plus the gift of sweat equity exceeds the required investment. Example: Borrower s father gives a gift of sweat equity in the amount of $2,000. The borrower s earnest money deposit is $1,000 and the statutory investment is $3,000. In this scenario, the borrower could not receive cash back. However, if the borrower s earnest money deposit was $2,000, he/she could receive $1,000 cash back at closing.
