Are you losing money. Seller paid closing costs and the maximum for investment homes.

Hello,

I am seeing many investment home purchase deals with seller paid closing costs exceeding the maximum amount and this is lost money for a purchaser. If you are buying an investment home right now, you, as the borrower/investor, must know the maximum that Fannie Mae and Freddie Mac allows is 2% seller paid closing costs, regardless of down payment amount.

For example, if your agent advises asking for 3% and the seller agrees, Fannie Mae will only allow 2% and the seller keeps the left over 1%. This is lost money. You are better to get more aggressive on price and only ask for 2% seller paid closing costs. Again, this only applies to investment purchases. Owner occupied and 2nd homes are not subject to this limit. They have another set of limits, depending on down payment amount.