In a FHA loan, is it legal/allowed for Seller to pay for Closing Costs?

Asked by SanFran, Broomfield, CO Fri Apr 17, 2009

I am coming with my own 3.5% down. Knowing that, which of these closing costs or all of them - is the Seller allowed to pay the Lender? -->
1. Lender Charges (processing fee)
2. Points,
3. 3rd party fees (Title insurance, etc) ,
4. 1.75% Upfront MIP?
I see conflicting reports about Seller allowed to pay 3% and 6%? Which one is it?

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Brian Burke, Agent, Highlands Ranch, CO
Sat Apr 18, 2009
I think both Answers are good and The Seller can Pay UP TO 6% for closings costs, pre-paids and the items you have listed. The Seller can no longer pay any of your Down Payment. Depending on the loan amount more than 3% for closing may be needed.
1 vote
Kristal Kraft, Agent, Greenwood Village, CO
Sat Apr 18, 2009
It is certainly confusing to decipher information on the internet. It's always best to confirm with a reliable lender in the state which you are doing business. You are allowed to contribute 6% of the loan amount at closing to pay for closing costs. I do believe you can also include prepaids in that amount.

Best wishes on your purchase.
1 vote
X, , Kirkland, WA
Fri Apr 17, 2009
Seller is allowed to pay 6% towards all the above listed items. The only thing they cannot pay is towards the down payment. I know a great lender in in CO if you're interested in their information.
1 vote
, ,
Wed Aug 19, 2009
FHA allows for 6% seller concessions. 1,2 and 3 can all be paid by the seller if totalling less than 6%. The 1.75% UFMIP cannot be paid by the seller and has to be financed into your loan amount per FHA. The 3% rule is for most Conventional mortgages.

hope this helps.

Chad Bergman, e-PRO, CML

Apollo Financial
Office 303-733-5950 x248
Cell 303-875-2240
e-fax 303-484-7922

Keller Williams Realty
Linked In:
0 votes
Stephanie Fix, Agent, Denver, CO
Tue Jun 30, 2009
If you are looking at short sale properties which are pre-foreclosure and not bank owned, seller paid closing costs may not be allowed. Otherwise you should be able to get seller paid closing costs on all other types of properties. You will need to make sure that the purchase price plus your $5000 or thereabouts closing costs will not exceed the appraised price or you may have issues.
0 votes
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