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Mark Aalto's Blog

By Mark Aalto NMLS: 116708 | Mortgage Broker
or Lender in Portland, OR

Concession Obsession - When to say When

I get asked fairly frequently by Realtors and consumers alike what the maximum contribution from the seller is for various programs. I have "borrowed" the information listed below from my employer. The original post can be found here

It has become common place to see seller concessions on most new real estate sales contracts. While this can be a tremendous benefit to a home buyer, it’s important to be aware of the limitations that are placed on the amount of concessions by the various loan programs that exist today. Listed below are the maximum amounts – expressed as a percentage of the purchase price – that the seller can contribute towards the buyer’s settlement costs:

Conventional LTV 91% or higher = 3% LTV 76% to 90% = 6% LTV 75% or less= 9% Investment = 2%

Homepath All = 6% Investment = 2%

FHA All = 6%

USDA All = 6%

VA All = 4%

The contribution from the seller can be used to pay for the buyer’s closing costs, prepaid items (such as property taxes, insurance, and interest), and deposits with the lender to establish reserve accounts. Note that the amount of seller contribution cannot exceed the actual costs that the buyer incurs, which prevents the buyer from receiving cash back at closing.

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