What's the % sellers assist allowed on 30 year conventional mortgage with 20% down?

Asked by Julien, Philadelphia, PA Mon Dec 29, 2008

I have two brokers talking with me. One says that I can get up to 6% sellers assist on a conventional 30 year mortgage with 20% down. The other says I cannot get more than 3% sellers assist in this situation. Who is right?

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Wa Macdonald, , Pittsburgh, PA
Thu Oct 29, 2009
Lori is correct. What she means is less than a 10% down payment; the seller is permitted to pay up to 3% of the sales price toward the closing and prepaid costs. Ten percent to 24% down is 6%, 25% down payment, the seller assist is 9% (little known rule). This all assumes that the loan is "conventional", ultimately sold and underwritten to Fannie Mae or Freddie Mac's guidelines. Loan officers think in loan to value (LTV), not down payment. Agents, did you ever wonder whether it's better to make a lower offer and no seller assist or a higher offer with an assist? I did, and I put up a comparison on my web site. Follow the link:
1 vote
In your comparison, why are the Closing Costs nearly the same for both scenarios? Wouldn't the Buyer expect to need about $6000 less at settlement since the Seller is paying this amount?
Flag Thu Feb 13, 2014
, ,
Wed Dec 31, 2008

This is a Fannie Mae Guideline.

Conventional Financing
Under 90% LTV - 6% Seller Assist
90.01% LTV and over is 3% seller assist
1 vote
do you happen to know where this is cited by Fannie Mae?
Flag Wed Nov 13, 2013
Eileen Musser…, Home Owner, York, PA
Mon Dec 29, 2008
Just wondering; if you have that much in cash, would it make sense to ask for a lower price rather than seller assist? {or are you asking for seller assist so that you have enough down to avoid PMI (MIP??)}

It would be a good idea to ask your questions directly to the lender you plan to use. There seems to be a lot of variation from one institution to another, especially if there are any special circumstances. It doesn't surprise me that you have seen more than one answer to your question.

1 vote
Jeremy S. Hi…, , Cherry Hill, NJ
Mon Dec 29, 2008

Unfortunately it sounds like you are not getting straight answers. FHA loans allows a max 6% seller concession while conventional loans sellers assist max is 3%. Call me if you would like a good faith estimate. I'd be happy to assist.

Best Regards,

Jeremy S. Hill, Mortgage Consultant
Aurora Financial Group, Inc
1 vote
Denise Brown, , 19468
Fri Jan 2, 2009
Hello Julien,

I would have to agree with Eileen on this one, I would certainly speak with your lender. However, with so much money down, I tend to steer my clients away from a seller assist. Dealing with many first-time buyers, I found that buyers do not really understand that with the seller assist you are actually financing the amount of the assist over the length of the loan. On a $100,000 loan, that comes to over $27 per month for thirty years (almost $10,000 for a $6,000 seller assist). Even if you have to pay PMI for a short period (until you have 20% equity in the home), you will probably not be paying anywhere close to that amount. If you do decide to pay PMI, please be sure to check with your lender on their regulations for terminating the PMI.

Denise Brown, Realtor
RE/MAX Achievers
610-819-1500, 484-459-4103
0 votes
Manu Kapoor, Agent, New York, NY
Tue Dec 30, 2008
You can get 5-6% depending on your lender.
Web Reference:  http://www.goforloanmod.com
0 votes
Edmund Choi, Agent, Paoli, PA
Tue Dec 30, 2008
Depending on the lender, conventional with 20% down should allow 6% seller's assist.
Web Reference:  http://PhillyandBeyond.com
0 votes
, ,
Tue Dec 30, 2008
Under 90% LTV - 6% Seller Assist - Conventional Financing

FHA is 6%

90.01% LTV and over is 3% seller assit!

Web Reference:  http://www.myallied.net
0 votes
Rhonda Porter, , Seattle, WA
Mon Dec 29, 2008
A seller can contribute up to 6% of the sales price (or appraised value, which ever is less) towards your allowable closing costs and prepaids with 20% down. The contribution cannot go towards your downpayment.

I'm amazed at the different answers you're getting here. This is a Fannie Mae guideline...with that said, some lenders have underwriting overlays in addition to conforming guidelines.

If your closing costs are less than 6% of the sales price, then you will not be able to use the entire 6% (unless your LO uses the 6% to buy the rate down).
0 votes
Dallas Texas, Agent, Dallas, TN
Mon Dec 29, 2008
BOTTOM LINE it depends on what the lender will approve. Lenders have different guidelines
Web Reference:  http://www.lynn911.com
0 votes
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