[Gustan Cho]

FHA Seller Concession and Down Payment Assistance Scenario

Let’s assume a homebuyer wants to purchase a home in an area where the 2026 FHA loan limit is $541,287. The buyer qualifies for the minimum 3.5% FHA down payment and plans to obtain down payment assistance for the entire 3.5%. The buyer also wants to request the maximum 6% seller concession.

The seller concession and the down payment must be treated separately. A seller concession may be used toward eligible closing costs, prepaid expenses, discount points, and other permitted settlement charges. It cannot be used to satisfy the buyer’s required 3.5% minimum investment.

To determine the highest purchase price that can be financed with a base FHA loan of $541,287 and a 3.5% down payment, divide the loan limit by 96.5%.

The calculation is:

$541,287 ÷ 96.5% = approximately $560,919

Therefore, the highest theoretical contract price would be approximately $560,919, assuming the home appraises for at least that amount.

At a purchase price of approximately $560,919, the buyer’s required 3.5% down payment would be about $19,632. The down payment assistance program could potentially provide this amount, subject to the program’s guidelines.

The maximum 6% seller concession would be approximately $33,655. However, the buyer could only use the amount needed to cover eligible closing costs and prepaid expenses. Any unused portion of the seller concession could not be given to the buyer as cash or applied toward the required down payment.

What Happens If the Purchase Price Is $600,000?

A buyer may still purchase a $600,000 home with FHA financing, but the down payment would be greater than 3.5% because the FHA base loan cannot exceed the $541,287 area loan limit.

On a $600,000 purchase, the difference between the sales price and the maximum FHA base loan would be $58,713.

A down payment assistance program providing 3.5% of the $600,000 purchase price would contribute $21,000. The buyer would still need approximately $37,713 from another acceptable source.

The additional funds could potentially come from the buyer’s own money, an eligible gift, a second down payment assistance source, or another source permitted under FHA and lender guidelines.

The maximum 6% seller concession on a $600,000 purchase would be $36,000. That money could help cover eligible closing costs, prepaid property taxes, homeowners insurance, discount points, and other allowable charges. It could not be used to cover the $37,713 down payment shortage.

Why the Seller Concession Cannot Be Added to the Down Payment

It would be incorrect to subtract both the 6% seller concession and the 3.5% down payment from the sales price when calculating the maximum FHA loan.

The 6% seller concession is not equity and does not reduce the buyer’s required investment. It only helps pay allowable settlement costs. The purchase price and required down payment must still support a base FHA loan that does not exceed the applicable loan limit.

Bottom Line

With a maximum FHA base loan of $541,287 and down payment assistance covering only the required 3.5% down payment, the highest theoretical purchase price would be approximately $560,919.

The buyer could purchase a home for $600,000 or more, but the required down payment would increase because of the FHA loan limit. The 6% seller concession could cover allowable closing costs, but it could not replace the additional down payment needed above the FHA loan limit.

The financed FHA upfront mortgage insurance premium is generally added to the base loan amount separately. Therefore, the final total loan balance may be higher than the FHA base loan limit.

[Gustan Cho]

Lets go over a seller concession scenario . Lets say a homebuyer wants to ask the maximum seller concession on a $600,000 plus home. The maximum FHA loan limit for the area in 2026 is $541,287. The down payment requirement is 3.5% down payment due to being FHA. The homebuyer is seeking a DPA of the 3.5%. At what price would the homebuyer need to get an executed real estate contract that will cover the 6% seller concession PLUS the 3.5% down payment FHA requires for the down payment and still meet the maximum $541,287 maximum FHA loan limit?

[Gustan Cho]

Here’s a blog post about this topic as well https://gustancho.com/how-to-obtain-a-mortgage-broker-license/

[Gustan Cho]

Certain states has a maximum distance from the MLO personal residence to the mortgage company’s headquarters or licensed mortgage branch office.

The answer to the following question of the following:

NMLS State Distance Requirements from MLO Residence to Mortgage Branch Office: What states have NMLS MLO personal residence to mortgage branch distance requirements?

Current state MLO residence-to-branch proximity rules

There is no single national NMLS mileage rule. NMLS tracks work-remote information, but each state determines whether an MLO may work remotely, must be tied to a licensed office, or must live within a particular distance of that office. (Nationwide Licensing System)

These are the current rules or standards I could substantiate:

• Wisconsin — 100 miles; hard rule. An MLO must be assigned to a licensed or registered office or branch within 100 miles of the MLO’s residence. If the assigned office is farther away, the MLO’s residence generally must be licensed as a branch. (DFI)

• Wyoming — 100 miles; Division policy. Wyoming’s Division of Banking uses a “commutable distance” standard requiring branch managers, licensed MLOs, and other originators to live within 100 miles of the licensed location where they work.

• New Hampshire — 100 miles; conditional home-office rule. An MLO may work from home, but the home or other publicly identified location must be within 100 miles of the supervising New Hampshire licensed office under the applicable exception. This is not a blanket rule for every residence; it is tied to the home-office/location arrangement. (banking.nh.gov)

• Vermont — “reasonable commuting distance”; no stated mileage. MLOs working under a mortgage broker license must be assigned to a licensed broker location and live within a reasonable commuting distance of that location. Vermont does not set a published mile limit in this rule. (Legal Information Institute)

• New York — commutable-distance limitation; no verified numeric standard. New York DFS materials confirm that commutable-distance limitations tied to mortgage-banker licensing remain in place, but I did not find a current published mileage or time threshold. Treat this as a regulator-confirmation state before placing a remote MLO far from the assigned office. (Department of State)

Rules often mistaken for active distance caps

• South Carolina: The state may allow an MLO’s residence to be licensed as a branch when it is more than 75 miles from the commercial branch. That is not a rule requiring every MLO to live within 75 miles. (South Carolina Legislature)

• New Mexico: The former 75-mile commutable-distance practice is not a current hard cap; the state says its remote-work guidance remains in place. (NM RLD)

Outdated rules to remove from compliance charts

Mississippi’s old 125-mile assignment rule was removed effective July 1, 2025. Pennsylvania now permits MLOs to work from remote locations. Connecticut removed its former 100-mile MLO office requirement in 2022, and Maryland ended its distance-affidavit requirement in 2017. (dbcf.ms.gov)

For a multi-state branch policy, treat Wisconsin as the clearest hard 100-mile rule. Obtain written regulator guidance before relying on a distance standard in New York, Vermont, Wyoming, or New Hampshire—especially for an MLO working permanently from home.

mortgage.nationwidelicensingsystem.org

Appendix 7: Work Remote FAQs

Frequently asked questions about working remote.

[Gustan Cho]

After careful review, you are not answering my question. Let’s take the current branch of NEXA Lending in Westmont, Illinois managed by myself, Gustan Cho, but Gustan Cho is leaving Nexa Lending to Coast 2 Coast Mortgage LLC and offers the NEXA Lending Branch in Westmont Illinois NMLS 2315275 to experienced business associate and close friend, Michelle McCue. Let’s analyze how much the Westmont Illinois branch cost Gustan Cho and what are the states that the Westmont Illinois branch has a personal residence of Gustan Cho (Salem Wisconsin) to branch office (Westmont, Illinois)

[Gustan Cho]

TRID Mortgage Loan Officer Compliance Training – Advanced

Advanced TRID training helps mortgage loan officers avoid delayed closings, unexpected fee increases after closing, and costly compliance errors. Basic training covers when to send the Loan Estimate and Closing Disclosure, but advanced sessions dive into the specific timing rules, required redisclosure documents, and the circumstances under which lenders are responsible for cost increases.

The File Closing Point

Once the borrower receives the Loan Estimate, they need to confirm they want to move forward. Until then, the lender or broker may charge only a legitimate credit report fee. Silence from the borrower does not count as agreement.

Fees for processing, appraisal, or underwriting cannot be charged until the borrower has both received the Loan Estimate and agreed to continue.

Advanced training should stress the need for clear documentation. Each file must include the Loan Estimate and specific proof that the borrower agreed to continue. General notes such as “borrower wants to proceed” are not sufficient, especially when there are multiple Loan Estimates with different terms.

Many MLOs Are Wrong About When Application Clock Starts

Under TRID, an application is considered submitted when the lender has the borrower’s name, income, Social Security number or other credit information, property address, estimated property value, and requested loan amount.

The lender must send the Loan Estimate within 3 business days of receiving all 6 items. Waiting for additional documents such as pay stubs, tax returns, or bank statements does not pause this timeline.

Experienced MLOs need to recognize when a casual conversation turns into a legally binding application. This is especially important when gathering leads through phone calls, texts, online forms, or CRM systems, where information may come in gradually.

Examples of Legitimate Changed Circumstances and Poor Estimates

A new Loan Estimate cannot be used to correct an error from underestimating costs. Under TRID, a true change in circumstances includes unusual or unexpected events, new information about the borrower or transaction, or other surprising details.

Updates to the Loan Estimate may be allowed for changes in borrower eligibility, rate locks, expired Loan Estimates, borrower requests, or some delayed construction settlements.

Valid reasons to update a Loan Estimate include discovering a farm designation in an appraisal, finding an unreleased lien that needs extra title work, a decrease in verified income, or a change requested by the borrower. Underestimating appraisal costs, unexpected title company fees, or missing fees are not valid reasons to update the estimate.

Timing for Redisclosure: The Three-Day Rule with Some Exceptions

Once a lender has enough information to require redisclosure, they usually have three business days to provide it. If the rate is locked after the first Loan Estimate, a revised estimate with the locked rate, points, lender credits, and other rate-related items must be sent to the borrower within three business days of the lock. The estimate must reach the borrower at least four business days before closing. After the Closing Disclosure stage, any changes must be shown with a corrected Closing Disclosure, not by sending another Loan Estimate.

Fee Tolerances: Who Covers Costs When They Go Up?

TRID Categorizes Costs Into Three Broad Categories.

• The zero-tolerance category covers lender and broker fees, affiliate fees, required services the borrower cannot shop for, and transfer taxes.
• If a valid redisclosure is not made on time, these fees cannot go up.
• 10% aggregate tolerance category includes recording fees and certain third-party services that the borrower did not select.
• In this category, the total charges may increase by no more than 10%, even if an individual fee increases by more than 10%.
• The no-numeric-tolerance category includes prepaid interest and services the borrower selects. Lenders must provide the most accurate estimate possible and cannot use unsupported numbers.
• If there is an overcharge, the lender must refund the difference within 60 days of closing and update the Closing Disclosure to show the refund.

TRID Business Days: The Most Common Mistake.

• TRID uses two different definitions of “business day.”
• For the initial Loan Estimate and most revised Loan Estimates, a business day is any day when the lender’s offices are open to the public for most of their business hours.
• For presumed receipt rules, the seven-business-day Loan Estimate waiting period, and similar rules, a business day is any day other than Sunday or a federal holiday.
• For the Closing Disclosure waiting period, a business day means every calendar day except Sundays and federal holidays.
• It might seem compliant one day and not the next, depending on which business day definition is used.
• MLOs should never trust memory or a real estate agent’s calendar to count disclosure days.
• The important date is consummation, when the borrower is officially committed under state law.

A Corrected Closing Disclosure Restarts the Three-Day Waiting Period.

• Most changes to the Closing Disclosure do not restart the three-business-day waiting period.
• The borrower may receive a corrected Closing Disclosure at or before consummation in most instances.
• A new waiting period is required only if the APR exceeds Regulation Z’s limits, the loan product changes, or a prepayment penalty is added.
• Experienced MLOs should be able to spot these three triggers when reviewing a loan file.
• The rules require that the Loan Estimate be delivered on time.
• Both the Loan Estimate and the Closing Disclosure be accurate.
• Each Loan Estimate be updated for valid reasons; rate locks be shared and renewed promptly.
• The Closing Disclosure be provided and completed on time; and fees and lender credits be calculated correctly.

There are Four Redisclosure Questions to Answer When Considering Advanced Knowledge of the TRID Regulations:

1. What changed?
2. Why is this a valid TRID trigger?
3. When did the lender first become aware of this?
4. Was the disclosure issued on time, and was it the right one?

An advanced course should give participants hands-on experience with real loan files. It should include calendar-based drills, tolerance calculations, and realistic scenarios like Closing Disclosure delays, going far beyond just learning definitions.

[Gustan Cho]

Kim

Finally getting together and ready to kick ass. Welcome on-board and let go to the top.

[Gustan Cho]

.

Your loan-to-value ratio puts you in a strong and secure financial position.

Your Current Situation

• Estimated Home Value: $620,000
• Current Construction Loan Balance: $155,000
• Cash Needed: $25,000
• Requested New Loan Amount: $180,000

Loan-to-Value (LTV)

A $180,000 mortgage on a $620,000 home gives you a low loan-to-value ratio of 29%.

With this setup, you would have about:

• $440,000 in home value you own ($620,000 – $180,000)
• Approximately 71% equity

Most lenders require a higher loan-to-value ratio, so with a 29% ratio, your ownership in the home is very strong.

Potential Solutions

Cash-Out Refinance

If you replace your construction loan with a new mortgage, you could receive about $25,000 in cash after closing costs.

• Pay off the $155,000 construction loan.

Construction to Permanent Loan

If your lender offers a One-Time Close or Construction-to-Permanent Conversion, you may be able to include the extra funds in your final loan.

Home Equity Loan or HELOC

Another option is to:

• Refinance or change the $155,000 balance and
• Obtain a $25,000 HELOC or 2nd mortgage.

For most people, getting a $180,000 first mortgage with a 29% loan-to-value ratio is usually the simplest option.

Criteria for Mortgage Approval

Lenders usually consider factors like your credit score.

• The borrower’s average income
• The borrower’s work history
• The borrower’s debt compared to income
• How the home is used (main home, second home, or rental property)
• Whether the home has its final approval certificate

Relevant Information

Use the following information to check your mortgage eligibility and find the best options. Is this your primary residence?

1. Which state is the home located in?
2. Approximately what is your credit score?
3. Are you working for someone else, self-employed, retired, or receiving disability income?
4. Has your home received its final certificate? With a home valued at $620,000, requesting a $180,000 loan is a careful choice and should meet most mortgage program requirements.

[Gustan Cho]

If a major bank advertises a 30-year fixed rate of 6.25% while the national average is between 6.5% and 6.7%, it makes sense to be skeptical. Rather than only verifying the rate, it helps to understand why it might be lower. For borrowers with strong credit, the typical 30-year fixed loan rate falls between 6.5% and 6.6%.

Who Can Get Chase’s 30-Year Fixed at 6.25%?

Even though these rates are widely advertised, only applicants who meet strict requirements will qualify.

• 740+ credit score
• At least 25% down
• Primary residence
• Low loan-to-value
• Conforming
• Significant reserves
• DTI < 45%
• Relationship banking
• Certain lock
• Certain property

Chase explains that your rate depends on factors like your credit score, down payment, loan details, and more.

Is Chase Masking Discount Points?

• It’s possible that’s the case.

It’s a good idea to look beyond the interest rate and compare it to the annual percentage rate (APR).

• APR = 6.58%

Often, the gap between the interest rate and the APR indicates whether points or extra fees are added to the loan.

• Chase explains that each discount point typically costs about 1% of the total loan amount.

When You See an Advertised Interest Rate, Ask About These Things:

1. What is the APR?
2. How many discount points are required?
3. Is lender compensation built into the pricing?
4. Are there origination fees?
5. Is there underwriting or processing?
6. Are there relationship pricing discounts?

Why Can Chase Offer Lower Rates Than Many Other Mortgage Companies?

Several main reasons help explain why these rates can vary so much.

Diversified Revenue Streams

Chase earns money from many sources, while independent mortgage banks rely only on mortgages. These sources include:

• Deposits
• Wealth management
• Credit cards
• Commercial lending
• Investment banking

For banks, mortgages are often more about bringing in new customers than making a profit.

Relationship Discounts:

• Chase offers mortgage rate discounts to customers who keep large balances in deposit or investment accounts.
• In some cases, these discounts can reach up to 1.00%.
• If you have $1 million or more parked with Chase, you are likely to unlock rates that most applicants can only dream of.

Portfolio Lending:

• Large banks can keep loans in their own portfolios, something independent lenders usually cannot do.

Temporary Rate Promotions

• In 2025 and 2026, Chase ran special mortgage rate promotions, reducing rates by up to 0.25%.
• However, these deals may come with hidden extra fees.
• Most large lenders use third-party services and charge related fees for required reports.
• Flood certification
• Tax service
• Title
• Recording

Here are Some Potential Third-Party Fees to Watch For:

• Processing fee
• Underwriting fee
• Administration fee
• Technology fee
• Funding fee (non-VA)
• Document preparation fee

Fees caFees can differ greatly between lenders. The Loan Estimate reveals the real cost of a loan. Two lenders might offer the same rate, but one could charge $4,000 more in fees.

Are Competitive Rates Today?

Competitive Rates Apply to Borrowers with the Following Qualifications:

• 760+, FICO
• 25% Down
• Single-family, owner-occupied,
• Conforming loan
• Significant reserves

Current Mortgage Pricing Suggests the Following Ranges:

• 6.25% to 6.625% with varying credits or points
• 6.50% to 6.75% is close to par. Rates depend on the lock-in date, lender, lock period, loan location, loan type, loan-level price adjustments (LLPAs), and other market factors.

Mortgage Brokers Often Work with Wholesale Lenders, Who Can Offer Lower Rates Because Their Operating Costs are Lower Than Those of Retail Banks.

Powerful Wholesale Lenders Often Find Themselves Competing Against the Following:

• United Wholesale Mortgage
• Rocket Pro
• Pennymac
• Homepoint (where available)
• Flagstar Bank
• Rate

Experienced mortgage brokers can often use their network of wholesale lenders to find better rates or lower fees for qualified borrowers.

Gustan Cho Associates (GCA) may not always have the lowest rates, but stands out because of a wide range of products and services, including:

• Market access to wholesale lenders
• The ability to shop lenders
• Manual underwrite
• FHA and VA expertise
• Non-QM
• High DTI
• With fewer restrictions than many lenders, prime borrowers can get the best rates by shopping around and comparing offers from different investors.

What I Think

If Chase advertises a 6.25% rate, I don’t believe it’s automatically a scam.

However, there is almost always a catch or a specific reason for a rate that low.

To decide if it’s a good rate, I look closely at the details.

• Interest Rate
• APR
• Total Lender Fees
• Daily Fees
• A 6.25% rate with two points could end up costing more than a 6.5% rate with a lender credit.
• Lately, mortgage rates have been unpredictable, influenced by factors such as oil prices, inflation expectations, Treasury yields, strong job markets, and unrest in the Middle East.
• When tensions with Iran eased, oil prices fell, and Treasury yields stabilized.
• It’s still unclear if this will lower mortgage rates, since it depends on how the bond market sees inflation.
• Right now, mortgage prices mostly track the 10-year Treasury yield and mortgage-backed securities, rather than any single global event.