What You Should Know About Seller Concessions
We see several transactions where the buyer and seller have negotiated for the seller to pay for all or a portion of the buyer’s required closing costs. For conventional loans, the seller may only pay up to 6% of the sales price of the buyer’s closing costs and prepaid items when the buyer is purchasing a primary residence or second home with at least 10% down payment.
If the buyer is putting less than 10% down, the seller concession amount is limited to 3%. FHA loans and USDA loans allow for the seller to pay up to 6% of the buyers closing costs and prepaid items.
Investment properties are limited to 2% of buyer’s closing costs and prepaid items. Buyers obtaining a VA loan to purchase their new home are limited to 4% of the sales price to be contributed by the seller towards the Veteran’s closing costs and prepaid items.
A home buyer purchasing a $250,000 house with 10% down could receive up to $15,000 in closing cost assistance (6% of the sales price). This dollar figure is a lot more than the typical seller is willing to contribute, so the limits won’t even be a factor in most cases.
For more information about Seller Concessions, please contact Aaron Jernigan today at 417.849.7801.