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Seller Contributions

A realtor called me today with a question regarding maximum seller contributions on an FHA deal.  A seller contribution is a dollar amount or percentage of the purchase price that a seller agrees to contribute towards closing costs, prepaids, and/or points.

Each loan product has its own contribution limit which ranges from 3% to 9% of the purchase price. Below is a seller contribution chart organized by loan product.

LOAN PROGRAM

Conventional Conforming

FHA

VA

USDA

 

LTV 90.01-97%= 3%

 

LTV 75.01-90%= 6%

 

LTV ≥ 75%= 9%

6%

The seller may pay all of the buyers closing costs, normal points, and up to 4% concessions. Concessions include prepaids, VA funding fee, payment of extra points for permanent buydowns, and the payoff of credit balances or judgments on behalf of the buyer. No maximum seller concession; but, if they exceed 6%, a comment from the appraiser with respect to the impact to value is required.

It is important that your realtor knows which type of financing you’re receiving so that he/she knows the amount of seller contribution you can request in your offer. If you have any questions about seller contributions and/or getting a mortgage loan in the state of Virginia, please feel free to contact me.

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