Clarifying an answer below:
FHA prohibits ANY contribution towards down payment from a seller or other party with a financial interest in the transaction.
Here is the text of the law:
"`(C) PROHIBITED SOURCES- In no case shall the funds required by subparagraph (A) consist, in whole or in part, of funds provided by any of the following parties before, during, or after closing of the property sale:
`(i) The seller or any other person or entity that financially benefits from the transaction.
`(ii) Any third party or entity that is reimbursed, directly or indirectly, by any of the parties described in clause (i).
This subparagraph shall apply only to mortgages for which the mortgagee has issued credit approval for the borrower on or after October 1, 2008."
Paragraph A as referenced above:
"`(A) IN GENERAL- A mortgage insured under this section shall be executed by a mortgagor who shall have paid, in cash or its equivalent, on account of the property an amount equal to not less than 3.5 percent of the appraised value of the property or such larger amount as the Secretary may determine."
If you seek conventional financing (ie not FHA, VA, or RDA), Fannie and Freddie regulations do not permit a seller to contribute towards the buyer's down payment.