Home Buying in Atlanta>Question Details

no, Home Buyer in Atlanta, GA

In what way can I use a sellers consession of 7.45% towards the down payment? The appraisal can support the consession.

Asked by no, Atlanta, GA Thu May 20, 2010

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As I understand the question, you can't do it. Sellers concessions can only be used for closing cost and pre-paid items such as escrow account funding and interest. If you are going with an FHA loan, the max allowed is now 3%
If you qualify fro a VA loan, that might be your best bet if you are trying to come up with little out of pocket. VA still allows up to 4% and they will finance 100% if it appraises.
1 vote Thank Flag Link Thu May 20, 2010
It could exist but only one that I know of.
NACA promotes that you can ask for as much concession as your Realtor can negotiate, which they use to buy down the interest rate. Unfortunately, this is not every case. And they may not be the loan processor that you are currently using.
1 vote Thank Flag Link Thu May 20, 2010
Seller contributions up to 6% are allowed for closing costs and pre-paids, not closing costs.

Mark Lackey
Atlanta Housing Source at
Solid Source Realty, Inc.
Associate Broker

Home Buyers & Sellers - http://www.AtlantaHousingSource.com
Property Management – http://www.SolidSourcePM.com
1 vote Thank Flag Link Thu May 20, 2010

Most loan programs allow for a max of 6% towards Seller's concessions. You can use them any way you want.

Let me know if you need a lender.

1 vote Thank Flag Link Thu May 20, 2010
Dear Recovery. I am not aware of any lender program that allows for a seller contribution to down payment at this time. In fact, there is usually a cap on any type of seller contribution for most loan products. Rule of thumb is about 3% but talk to a trusted lender because these things change like the wind! As for the other part of your question - if you mean adding th 7.45% on top of the price that seller will actually receive, something like was done on the old down payment assistance programs, to my knowledge those are a thing of the past.

Good luck.
1 vote Thank Flag Link Thu May 20, 2010
HI Recovery, the answer depends on the type of financing you are utilizing, and your down payment.

If you have an fha loan the max seller concessions allowed now is 3%, unless your fha case number was issued prior to April 15th of this year. Either way subtract the max seller concessions allowed and reduce your sales price by the amount left.

Conventional financing allows for 6% seller concessions with 20% down so I would reduce the sales price by 1.45%.

Make sure that the sellers concessions are seller paid closing costs that can be used for "prepaids, closing costs, and discount points". Hope this helps.

see live current mortgage rates at http://www.current-mortgage-rates.net
0 votes Thank Flag Link Wed Jun 9, 2010
From your question, I assume the seller has agreed to reduce the sales price of the home by 7.45%. You want to see if this can anyway reduce your downpayment. The answer is no. I will give you an example. Let's say the home was listed for $100,000 and you offered $100,000. The offer was accepted but after a home inspection, the seller agreed to discount the sale of the house by $7,450 because of new appliances. There are two ways to look at this. You could re-write the sales contract for $92,550 and you will be responsible for your own closing costs. Or you could re-write the contract for $98,550 and the seller pays $6,000 towards your closing costs and prepaids. In both examples, the seller has still given a discount of 7.45% off the original sales price. If you go with example number 2, you would work out the best in my opinion. What you can do is qualify for an FHA loan and only be required to place a downpayment of 3.5% of $98,550. This would only work out to $3,450 with all of your closing costs and prepaid items paid. Hope this helps.
0 votes Thank Flag Link Thu Jun 3, 2010
Wow, pompousness, the lack of grammaticality, and redundancy all rolled into one answer. No wonder agents and brokers rate so high on the "Whatcha talkin bout Willis?" scale.
0 votes Thank Flag Link Fri May 21, 2010

Just to bring all of the mostly correct statements together, I would advise that the Seller can not make any contribution toward "downpayment". He can pay currently under FHA up to 6% ( it has been proposed that FHA will drop from 6% to 3% but that is not yet effective or in place. The seller can perhaps pay all of the closing costs (Get loan officer to control to make sure your total prepaids are also covered by the seller) and likely your prepaids (buyer pro-rated Property Tax share, Homeowners/Hazard Insurance and the appraisal fee). Because the purchaser would not have to pay these prepaid fees he/she could use those funds toward their downpayment. Under FHA you can also get a gift from a family member for downpayment. That gift plus your prepaid savings added together. Could perhaps help you make up the downpayment. Also based on your income and County, there may be some county downpayment money available. If so, you can use that and also just let the seller give you a better price without adding for downpayment.

For intelligent direction and possible solutions give me a call (770-316-8072) or e-mail me and I will pass Mark's e-mail and number on to you. All of these things are legal and approved by FHA. NOTE: THIS IS PROTECTIVE OF YOUR AGENT. I am only offering freindly advise. In this Sick Market, Agents need to help each other and their clients to help us all make it to the other side.

Good Luck!

Ken Guillen
Web Reference: http://www.NewLifeReg.com
0 votes Thank Flag Link Fri May 21, 2010

I agree with what has been said already. Give me a call at 678-427-5512 if you wold like to further discuss your question.

Rick Payne
Keller Williams Realty
0 votes Thank Flag Link Fri May 21, 2010

I am with Michael Hammond on this one. Where did you get a number for seller's concession like that?

It’s been my experience that the higher the sales price, the lower the percentage of seller concessions the seller is willing to pay. For example, if this is this a $100,000 purchase that would be $7,450 seller paid in closing costs, pre-paid expenses, and points at $200,000 your talking $14,900. That seems awfully excessive and I can't image you getting 7.45% on a $300,000 +price point.

For Fannie or Freddie Loans, the maximum allowable seller’s concessions are:

3% on 90-100% Loan to Value Loans.
6% on 75%-90% Loan to Value Loans.
9% on 75% or below Loan to Value Loans.

For government loans.

Max is 6% on FHA. (HUD was going to change to 3%, but this remains at 6%)!

When seller concessions exceed those percentages it creates "an inducement to purchase" which is a big no-no.

Hope that helps!
0 votes Thank Flag Link Fri May 21, 2010
Am very curious, Recovery, where did you find a seller's concession of that amount? Homeowner or builder? Why not simply get them to reduce the sales price 1.45% or more? Feel free to reply privately if you wish. Good Luck!

Michael Hammond

0 votes Thank Flag Link Fri May 21, 2010
5 thumbs up. Recovery - what are you going to do?
0 votes Thank Flag Link Fri May 21, 2010
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