How Much Can the Seller Pay of my Closing Costs??

By
Mortgage and Lending with www.DaveYourMortgageGuy.com, FHA, VA, USDA, HomePath, Jumbo NMLS #293883
http://actvra.in/8V8

Many times I am asked by Buyers and Realtors "how much can the seller pay in closing costs"?  It is good to know when negotiating on a home how much the seller can pay of your closing costs.  This would make it easier for you to get into a home with less money needed.  Here are the allowable amount that a seller can pay in closing costs per the different loan types.  The % is based on the sales price.  So if the seller can pay 3% in closing costs of a $100k sales price it would be, $3000 that the seller could pay of your closing costs.  Pre-paids are also considered part of the "closing costs" in this example.  Pre-paids are the setting up of your escrow account, taxes, insurance, days of interest etc. 

FHA Loans-  FHA loans are great loans and allow the seller to pay up to 6% of your closing costs.  Keep in mind, that you may not need the seller to pay that much in closing costs.  Many real estate contracts are worded to say up to "?" in closing costs.  So if you ask for the seller to pay $5000 in closing costs but only use $4500, the seller would just keep the difference

VA Loans- VA loans are fantastic loans if you are a Veteran.  They offer 0% down payment and no monthly mortgage insurance.  On top of that the VA actually does not let the buyer pay certain fees, so the seller most likely pays those fees.  On top of these fees the seller can pay up to 4% toward your closing costs.  Now I have heard that the VA will allow up to 6% in seller paid closing costs, but I have yet to find a bank or mortgage lender that will allow more then 4%

Conventional Loans- If you are putting a down payment less then 10% down payment, the maximum amount that the seller can pay in closing costs is 3%.  If your down payment is 10% or larger you can have the seller pay up to 6% of your closing  costs. 

USDA Loans- USDA loans are for someone buying a home in a Rural area.  These loans allow 0% down payment and no monthly mortgage insurance.  And.... They allow the seller to pay as much in closing costs as you would like.  

Whether you are buying or selling a home, it is important to those these numbers.  Like I mentioned earlier, make sure you know how much you really need to have the seller pay in closing costs.  You will lose out if you ask for $6000 and only need $5000. And that extra money can not go toward your down payment.   

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Texas Harris County Houston
Groups:
Texas Gulf Coast
Tags:
selling
buying
contract
seller
loans
closing costs
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conventional
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David Krichmar

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