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Can Seller Concessions Be Used For a Down Payment on Home Purchase
Homebuyers can get seller concessions for a home purchase from the seller up to 6% of the home purchase price which can be quite large. So on a $500,000 home purchase, the seller concessions can be a total of $30,000. Can the home buyer use the $30,000 on a $500,000 home purchase for the down payment?
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4 Replies
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Not all mortgage loan programs allow for 6% seller concessions. HUD, the parent of FHA loans allow up to 6% seller concessions. USDA LOANS allow up to 6% seller concessions. VA loans allow up to 4% seller concessions. Fannie Mae and Freddie Mac allow for 3% seller concessions on primary homes and 2% seller concessions on investment homes. You can only use seller concessions for closing costs and prepaid and not the down payment. If you have overage of seller concessions it needs to go back to the home seller. The home seller cannot give the overage of seller concessions to the home buyer. You can only use your own funds or gift funds for the down payment for a home purchase.
https://fhabadcreditlenders.com/seller-concessions/
fhabadcreditlenders.com
Seller Concessions For Homebuyer Closing Costs
Seller concessions is a credit from the home seller to the homebuyer to assist with the buyer's closing costs but not the down payment.
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You can use property tax prorations for the down payment on a home purchase. States like Illinois hace property tax that is paid in arrears. Therefore when a home buyer buys a house the seller owes the buyer the property tax that is prorated from the previous year. This property tax proration can be used for the down payment on the home purchase.
https://gustancho.com/property-tax-prorations/
gustancho.com
Using Property Tax Prorations For Down Payment on a House
Homebuyers can use property tax prorations by sellers for the down payment on a home purchase but still need to show they have the funds
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Non-qm loans allow anywhere between 3% to 6% seller concessions depending on the wholesale mortgage lender.
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If you can get the maximum seller concessions from the home seller towards homebuyers closing costs you will not have any closing costs.