Maximum Seller Paid Costs By Program Type
Buyers and Realtors, before agreeing to a sales price, know if you need or want seller paid closing costs. In addition, one should know the following about maximum seller paid costs:
- How much is needed for best approval?
- What is most beneficial?
- What are the program seller paid limits?
FHA Maximum Seller Paid Closing Costs
6% (sometimes lower with certain investors on lower credit scores). Even if a buyer has funds for paying costs, it could be a great strategy for the seller to pay them. Use up to the maximum seller paid costs because financing them with such low interest rates makes financial sense.
USDA Maximum Seller Paid Closing Costs
6% of the sales price. USDA will actually allow a buyer to finance closing costs. Closing costs may be financed if the property appraises for more than the price. This is unique to USDA.
VA Maximum Seller Paid Closing Costs
Maximum seller paid “concessions” for a buyer is 4% of the sales price. Sales concessions allow the seller to pay the buyer’s pre-paids (such as escrows and first year of insurances) or paying off buyer’s debts. On top of that, VA allows for ALL “customary closing costs” to be paid by the buyer. So between the two, usually they will cover all costs at closing as long as a sufficient amount is listed in the contract.
Conventional (Fannie Mae & Freddie Mac) Maximum Seller Paid Closing Costs
Seller paid closing cost limits depend on the down payment percentage and residency type. Below are the varying percentages.
- Primary: 3% over 90%, 6% from 75.01% – 90%, 9% when 75% or less
- Secondary: 6% from 75.01% – 90%, 9% when 75% or less
- Investment: 2% for any LTV
FHA 203k Maximum Seller Paid Closing Costs
6% of the sales prices. So keep in mind, this percentage is only based on the price. Therefore, the calculation does not use the amount of the renovations.
Reverse Mortgages Seller Paid Cost Rules
The seller can only pay costs that are customarily the seller’s at closing. The buyer must pay all buyer closing costs which even includes a home warranty.
Most Important Point to Remember With Seller Paid Closing Costs
If you only remember one thing in this article, just always talk with us before finalizing a contract! Better to have the amount for the seller paids right up-front than be short funds to close.
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Author: Russell Smith
Team Move OVM Financial loan officer success is Russell’s primary focus. He provides the tools and techniques he used as a top producing loan officer. Additionally he offers the Team Move OVM Financial Agent Training Program. Sharing is so important to Russell so he works diligently to be a resource to loan originators and Realtors.