What are the allowable seller contributions?
Conventional Loans If your down payment is 10 – 25%, the seller can contribute up to 6%. If your down payment is more than 25%, the seller can contribute up to 9%. If you’re buying an investment property, the seller’s contribution is limited to 2%, no matter what your down payment is.
How are seller contributions calculated?
Use seller contributions for upfront FHA, VA, and USDA fees
- FHA loans require an upfront mortgage insurance payment equal to 1.75% of the loan amount.
- VA loans allow the seller to pay all or part of the upfront fee (2.3%-3.6% of the loan amount).
- USDA requires an upfront guarantee fee of 2.0% of the loan amount.
How much can a seller contribute on a FHA loan?
6%
FHA guidelines allow for FHA seller concessions up to a maximum of 6% of the sales price of the home. The seller concessions can be used towards all closing costs, lender fees, points, appraisals and any other expenses except for the down payment.
What are seller concessions based on?
Seller concessions are when the seller pays a part of your closing costs. Unfortunately, this does not mean you’ll receive those funds in cash or as a discount on your loan. Instead, the seller offers to pay a certain amount by raising the cost of the home.
What is the seller contribution for FHA loan?
FHA Seller Contributions. For all FHA loans, the seller and other interested parties can contribute up to 6% of the sales price or toward closing costs, prepaid expenses, discount points, and other closing costs. If the appraised home value is less than the purchase price, the seller may contribute 6% of the value.
What is the difference between seller contributions and closing costs?
Seller contributions may not be used to help the buyer with the down payment, to reduce the borrower’s loan principal, or otherwise be kicked back to the buyer above the actual closing cost amount. While seller contributions are limited to actual closing costs, you can constructively increase your closing costs to use up all available funds.
How much can a seller contribute to a home loan?
For all FHA loans, the seller can contribute up to 6%. For USDA loans, the seller can contribute up to 6% of the buyer’s loan amount. This is the one loan type where the seller concessions are not based on the home price or appraised value.
What are seller concessions?
Seller Concessions, Defined Seller concessions are closing costs that the seller has agreed to pay. Sometimes, you can ask the seller to contribute to specific closing costs. Other times, sellers may simply pay a percentage of the total closing costs.