Can a buyer ask a seller to contribute 5% toward mortgage downpayment?

Asked by bonbon, Edgewater, MD Mon Jan 14, 2008

I'm not exactly sure as to what constitutes seller subsidy or seller's concession. Do such subsidies or concessions only apply to closing costs, points etc.? In other words, what type of concessions or subsidies is a buyer allowed (and not allowed) to ask? Thank you!

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12
Melissa Bish…, , Anne Arundel County, MD
Mon Jan 14, 2008
I just had a deal close on one of my own listings where the seller gave a total of 6% concession. 3% for closing costs and 3% gifted to the Nehemiah program which then gifted it back to the buyer for the down payment. The loan was FHA. You are also starting to see sellers offering to pay a year of HOA dues or a year of property taxes as an incentive for a buyer with the market being so tough. The limits to what can be requested depend more on your loan than on the seller. Most sellers in this market will negotiate with you because they want to get their home sold. Good Luck to you in your home purchase!
Web Reference:  http://www.MelissasHomes.com
2 votes
The Roskelly…, Agent, Gambrills, MD
Thu Jun 19, 2008
Hi Bonbon, There are loan programs which allow the seller to contribute up to 100% of your down payment. In addition, if you are looking in Anne Arundel County, there are programs sponsored by the county which will pay all of your closing costs and downpayment. Of course you have to meet the terms to qualify for those programs. But in general the answer is YES! It's a strong buyers market and you need to affiliate with an experienced agent and lender to make sure that you are getting the best price and financing terms. Do it sooner rather than later as interest rates may be on the rise!
Web Reference:  http://www.FortMeadHomes.com
1 vote
Walstmnky, Home Buyer, 07093
Mon Jan 14, 2008
Mr Hasib,

I would be curious to know the circumstances surrounding paying $15K more in order to get better financing. I'd greatly appreciate if you could elaborate on the deal, with as much detail as you feel comfortable sharing.
1 vote
Bill Seufert, Agent, Lancaster, PA
Mon Jan 14, 2008
bonbon,

There were a few programs ou there that allowed the seller to contribute money towards the down payment through a gift to a third party organization. I am not sure that they will be around much longer if at all.
Often times it is called Ameridream.
Your local lender should be aware.
Web Reference:  http://www.yorkshometeam.com
1 vote
Brian Burke, Agent, Highlands Ranch, CO
Mon Jan 14, 2008
You can ask the seller to contribute a down payment concession if the buyer,s lender approves it and if it is on the HUD.
1 vote
Debt Free Da…, , 85260
Mon Jan 14, 2008
If it is going through Fannie Mae or Freddie mac it wont fly. You can ask for up to 6% in closing costs however. Private financing may have a shot.
Web Reference:  http://getprequalified.com
1 vote
Bill Wootan's…, , Waldorf, MD
Mon Jan 14, 2008
You can request anything you want on an offer, but your lender is the one who can guide you on exactly can be allowed - it depends on the program you are going on - there is still 100% loans available, and closing cost allowed on some programs up to 6% of the purchase price - just check with your lender first before you write the offer.

Good luck

Bill Wootan, Leader of Team One
At Century 21 H T Brown Real Estate, Inc.
Web Reference:  http://www.SoMdTeamOne.com
1 vote
Gary Anthony, , Georgia
Mon Jan 14, 2008
The program guidelines on your mortgage might not allow for such a contribution. Depending on your program the seller can contribute up to 6% for buyer closing, of which none (usually) can go towards the downpayment. It's best to check with your mortgage broker.
1 vote
Ted Stewart, Agent, Baltimore, MD
Mon Jan 14, 2008
It depends. You should check with the buyer's lender. Generally a lender will allow the seller to contribute up to 3% or 6% towards the buyer's "prepaids" or closing costs. If the buyer is asking for any financial consideration from you, you or your agent should verify with the lender that it is permissable udner the terms of the buyer's loan before you sign anything. Unfortunately, I've seen agents put such concessions in an offer for their buyer without making sure it's something the lender will allow.

Ted Stewart
1 vote
Michael Krot…, Agent,
Mon Jan 14, 2008
Hi bonbon,

The simple answer is: It depends.

The buyer can ask for pretty much any kind of concession they want (closing costs/down payment assistance/your cat). As to whether or not that is allowed with their mortgage is something your agent should find out.

If they submitted an offer they probably also submitted their pre-approval letter from a lender which should have the contact info of their loan officer. Your agent (or you) can use to verify the validity of the terms of the loan they are seeking.
1 vote
Alan May, Agent, Evanston, IL
Mon Jan 14, 2008
In most cases, the lender won't allow a "credit" of more than 3%, back to the buyer for closing costs... (NOT downpayment) and in many cases that's becoming even tighter.
1 vote
Debt Free Da…, , 85260
Sat Jun 7, 2008
A seller can contribute up to 6% on FHA and Fannie Mae.

http://getprequalified.com/article/105056/fha/what_is_amerid…
Web Reference:  http://getprequalified.com
0 votes
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