What are the guidelines for FHA, VA, USDA, and Conventional seller concessions?
How much can a seller contribute towards closing costs for a buyer?
What are the guidelines for FHA, VA, USDA, and Conventional seller concessions? Due to the variety of questions we receive on our subject today, I feel it is important to give you the facts in order to help keep your all important financing headed to the closing table!
Obviously, the amount a seller can pay towards closing costs is contingent on what is able to be negotiated, but in today’s video tip I will explain the guidelines for FHA, VA, USDA, and Conventional seller concessions.
But, before we get started, don’t forget to download our USDA Blueprint for Success with the link below. This free guide is designed to help walk you through the USDA qualifying process step-by-step and is ideal for both homebuyers and Realtors alike.
What are the guidelines for FHA, VA, USDA, and Conventional seller concessions?
As a starting point, in situations where a seller agrees to pay towards a homebuyer’s closing costs, mortgage guidelines refer to this as either seller concessions or interested party contributions (IPC).
Now, let’s review the following seller concession limits for Conventional, FHA, VA, and USDA Loans:
CONVENTIONAL LOANS
- Primary Residences and 2nd homes allow for the following seller concessions:
- 3% of the sales price with less than 10% down payment
- For down payments of 10 or greater permit up to 6% of the sales price
- For down payments of 25% or greater permit up to 9% of the sales price
- Investment properties are capped at 2% of the sales price regardless of down payment amount.
FHA
Currently, FHA will allow up to 6% of the sales price towards seller concessions regardless of down payment.
VA
VA loans can offer the highest flexibility in seller concessions because it allows for a seller may pay all reasonable and customary closing costs and discount points without limit.
Additionally, a seller may pay up to 4% of the purchase price towards any combination of the following:
- Pre-paid expenses
- Funding fee
- Buy down fees
- Payoff of borrower liabilities, such as collections, judgments or other credit balances
USDA
- Up to 6% of the sales price permitted
Summary – FHA, VA, USDA, and Conventional Seller Concessions
As you can imagine, properly structuring the sales contract upfront, can help save time and potentially strengthen the offer.
If you have any financing questions which pertain to the loan program for the buyer and how it relates to the sales contract, please contact my office so we can help.
Remember, not all lenders have experience with processing and closing USDA loans. I see this each and every day on the 2nd opinions that come across my desk.
As a USDA Approved Lender and your trusted resource, we will walk you through the USDA loan qualifying process step-by-step. Just call, text, or email to discuss your scenario and let us show you the “Metroplex” difference!
Call/Text: (863) 593-2001
800-806-9836 Ext. 280
SeanS@MPLX.org
Thank you again for forwarding and sharing today’s video with any friends, family, co-workers, or clients who are looking to buy, sell, or refinance!
As always, I want everyone to make it a great day, and look forward to seeing you right here for the next tip of the week!
CLICK HERE TO DOWNLOAD YOUR USDA BLUEPRINT FOR SUCCESS
