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Answers (7)
Best Answer
- Maria Morton, "MariaMorton"
- Contributions:716
The lender will dictate how much the seller can contribute towards the buyer's closing costs.
- Corri Klebaum, "CorriKlebaum"
- Contributions:198
The loan program dictates the cap on seller concessions not the lender although there may be some that have a lower cap, albeit obscure. Clay is correct however there are also two other loan programs he did not mention...
-VA which allows up to 4% in seller concessions which may also be used to pay Veteran's other debts.
-USDA Rural which actually has no max but "typical" for the area per the appraiser comments.
-VA which allows up to 4% in seller concessions which may also be used to pay Veteran's other debts.
-USDA Rural which actually has no max but "typical" for the area per the appraiser comments.
- Margaret Seme, "bikeragent"
- Contributions:23
Clay
I do understand what you are saying-but here in NJ and when I was in GA prepaids are considered part of the actual closing costs--RE: Costs to close. so yes the total 6% would be used--but if they are 5% total including pre-paids then the total allowed would be 5%.
I always tell my lenders that I got the 6% not to leave any money on the table and to buy down the rate if needed to use it all up
- wayne lancaster, "funds2"
- Contributions:1174
Not surprising that Clay, a lender, gave the only correct answer. Conventional 5% down financing is limited to 3% seller contribution and 6% for 5%-20% down. Though this question really is appropriate for the Mortgage Advice blog, I noticed that Agents are still attempting to answer mortgage questions on this and the Mortgage Advice blog.............
- Clay Branch, "Georgia Loans"
- Contributions:7832
If you are buying as Owner Occupied or Second Home and no special program like Homepath, then yes, the IPC goes up to 9% with 25% or more down payment. If investment property then capped at 2%. The contribution can go towards closing costs and prepaids ( can not apply any to the down payment ). FHA is 6% regardless of down payment amount but with 25% down you would be wasting money paying the UFMIP and annual MI.
9% on a 200K loan amount = $18,000 which should easily exceed the actual closing costs and prepaids so any amounts not applied are lost. Do you think you need 9%, if so why? What is the purchase price and taxes per year?
"Generally this is what I know that FHA was going to reduce but it is still 6%of actual costs so if the contract reads 6% but the actual closing costs are 5% they can only contribute 5%."
If the closing costs are 5%, then an additional 1% will apply towards prepaids and the total 6% is used.
9% on a 200K loan amount = $18,000 which should easily exceed the actual closing costs and prepaids so any amounts not applied are lost. Do you think you need 9%, if so why? What is the purchase price and taxes per year?
"Generally this is what I know that FHA was going to reduce but it is still 6%of actual costs so if the contract reads 6% but the actual closing costs are 5% they can only contribute 5%."
If the closing costs are 5%, then an additional 1% will apply towards prepaids and the total 6% is used.
- Margaret Seme, "bikeragent"
- Contributions:23
The lender will dictate. Generally this is what I know that FHA was going to reduce but it is still 6%of actual costs so if the contract reads 6% but the actual closing costs are 5% they can only contribute 5%. and 3% for conventional. It also depends on if you are buying a property that is owner occupied investor loans. FHA is only for owner occupied and can be up to 4 units as long as 1 unit is owner occupied
Check with your lender about your particular circumstances.
Check with your lender about your particular circumstances.
- Sharon Lewis, "Sharon Lewis"
- Contributions:3914
In Oregon, how much can the seller/builder contribute to closing?
I just read a recent article that stated the seller can contribute as much as 9% if the buyer puts down 25% or more as a down payment. Can this be correct?
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