Soon, the Federal Housing Administration will be reducing one of its benefits for buyers using FHA financing. It's been annonce that sometime later this summer, the agency will reduce the maximum seller consessions allowed. These guidelines have provided a negotiating tool to help many a buyer who struggles to come up with more than the 3.5 percent down payment to purchase a property. They can request sellers to pay some or all of their settlement costs.
The maximum allowed seller consession is currently six percent of the purchase price. But soon this will be reduced to three percent, the same amount allowed in most conventional financing using Freddie Mac or Fannie Mae.
So for the purchase of a $400,000 home using FHA financing, a seller has been able to provide assistance to the buyer of up to $24,000 toward settlement fees and even for some costs for needed repairs. This figure will soon be reduced to $12,000 on the equivalent $400,000 purchase.
When will this change occur? It is unclear. FHA originally said it would take place early this summer, but now it looks more likely to be late in the season. So if you would need more than three percent seller help in making your sale go through, it would be in your best interests to get a ratified contract as soon as possible
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