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Seller Concessions on a VA Loan Cannot Exceed 4% BUT----

b. Seller Concessions

Seller concessions include, but are not limited to, the following:

•· payment of the buyer's VA funding fee

•· prepayment of the buyer's property taxes and insurance

•· gifts such as a television set or microwave oven

•· payment of extra points to provide permanent interest rate buydowns

•· provision of escrowed funds to provide temporary interest rate buydowns, and

•· payoff of credit balances or judgments on behalf of the buyer.

Seller concessions do not include

•· payment of the buyer's closing costs, or

•· payment of points as appropriate to the market.

•· Example: If the market dictates an interest rate of 7½% with 2 discount points, the seller's payment of the 2 points would not be a seller concession. If the seller paid 5 points, 3 of these points would be considered a seller concession.

d. The 4% Limit

Any seller concession or combination of concessions which exceeds 4% of the established reasonable value of the property is considered excessive, and unacceptable for VA-guaranteed loans.

Do not include normal discount points and payment of the buyer's closing costs in total concessions for determining whether concessions exceed the 4% limit.

Posted by Bruce Bourgault, Vice President, Mpro on 06/26/2007 07:41 PM

Comments (5)

seller consessions, va loan, consessions

Post is included in group: U.S. Military Online

5 Comments on Seller Concessions on a VA Loan Cannot Exceed 4% BUT----

Hi, I am a Realtor and just got a P&S signed with a seller concession of 6% on a VA loan. The loan officer said that this was the max... Now I am confused. This is my first VA loan. Are there any websited out there regarding all of the facts on VA loans?

06/26/2007 08:03 PM

by Lori Lincoln~Taunton, MA Real Estate Assonet MA, Rehoboth, Dighton, Swansea (Keller Williams Realty)

Hi Lori -- Sure the VA Lenders guide is at http://www.warms.vba.va.gov/26pamphlet.html and it is trhe bible for us as lenders. Other Realtors or Loan Officers who do not know how to do VA loans will always try and talk you out of them. Don't believe a word of it, I was able to do a loan for a VA client with a 460 credit score at market rates. Find any other loan program that you can do that with. Please contact me at any time with your VA questions. As a retired Army guy I do every thing in my power to help the Military. Good luck

06/26/2007 09:53 PM

by Bruce Bourgault, Vice President, Mpro (Central Pacific Home Loans)

Bruce-Thanks for the post and for saving that VA loan for me over the weekend. The lender that my buyer was using (from the new home builder) did not have any idea about the 6%. After I called you and relayed the info to her, it was able to work and the property is now in escrow.

06/27/2007 12:01 AM

by 1SG (Ret) David J. Kucic Hawaii Relocation/VA Expert (Tropic Lightning Real Estate)

Thank you very much for sharing, I really need to learn how to do VA loans.

06/27/2007 12:57 AM

by Shane Sarae, Senior Mortgage Planner (Loan Network LLC)

Please feel free to ask questions at any time.

06/27/2007 01:53 PM

by Bruce Bourgault, Vice President, Mpro (Central Pacific Home Loans)

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