Lenders have established limits on the amount of concessions a buyer may receive in a real estate transaction from interested parties. Obviously, lenders don’t want to finance a lot of fluff in the sales price. However, what about the inducement aspect of concessions? And, is the $8,000 tax credit an inducement that lenders should be concerned with?

Let’s say one is buying a $225,000 home and obtaining an FHA loan; the minimum down payment would be roughly $7,900 ($225,000 X 3.5% = $7,875 rounded up). At the end of the year, the buyer receives $8,000, which is recouping the down payment and making an extra $100 dollars. The home buyer has no stake in the property now, and is actually earning money to buy a home. Whether in this example or any other, the home buyer is being induced into a real estate transaction by means of this $8,000 tax credit.

For the lenders out there, with all sincerity, please explain how this is not an inducement equivalent to other IPC’s (Interested Party Concessions). It’s very obvious the government is not an interested party per lender guidelines, but it does have an interest in getting people to buy homes through inducements. Help me to understand for consistency’s sake.

Disclaimer: This real estate blog post is intended to be informational reading only, not legal advice; you may not copy, use and/or redistribute this real estate information without prior expressed consent from: Stephen Graham - Associate Broker - Realty Professionals, Inc (770) 491.1494 - All Rights Reserved