We obtained a FHA mortgage and want a $3,600 credit for inspection repairs back from the sellers at closing. Is this type of credit allowed for FHA?

Asked by Buyer, Buffalo, NY Sun Sep 27, 2009

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Jack Gillis’ answer
Jack Gillis, Agent, Dallas, TX
Sat Jul 9, 2011
To be accurate, more information is needed. FHA does not usually allow for a "credit" for repairs to be completed after closing, these days are gone. In today's environment, FHA, if you are doing a 203b loan, will usually allow for "escrowed repairs" up to $5,000; in other words, the seller deposits the money in escrow at closing, the repairs are completed, the lender performs an inspection approving the repairs, and then the escrow agent pays the approved contractor invoices. If it is a 203k loan then additional criteria, and usually higher credit scores, are required. In short, you cannot get a credit for $3,600 from the seller and walk-away from closing with the cash.

Keep in mind that if the appraiser notes these unrepaired conditions on the appraisal then the repairs must be completed prior to closing or you must go the "escrowed repair" route described above.

Jack Gillis, M.B.A., J.D.
Nathan Grace Real Estate
5619 Dyer Street | Suite 100
Dallas, TX 75206
Cell: 214.718.4910
Fax: 469.854.0673
0 votes
T.E. & Naima…, Agent, Dallas, TX
Mon Sep 28, 2009
If the repairs were called for by the appraiser, then the repairs have to be performed BEFORE closing. It is stated in the contract.

Also, depending on the sales price of the home, you are allowed up to 6% in seller concessions, this would include repairs, closing costs and prepaids.

Your best bet is still to get confirmation from your lender since they know specifics about your file.

Web Reference:  http://www.SumnerRealty.com
1 vote
Dallas Texas, Agent, Dallas, TN
Sat Oct 3, 2009
WOW that much in repairs !

You would need have those completed prior to closing all receipts presented.

Buyers agent can explain in detail all particulars.

National Featured Realtor and Consultant, Texas Mortgage Loan Officer, Credit Repair Lecturer
Follow me on Twitter: http://twitter.com/Lynn911

0 votes
Mary Beth Ha…, Agent, Dallas, TX
Sun Sep 27, 2009
You need to be working with your lender and Realtor on this. If you have not already asked the seller for closing cost concessions then you have that option to a point. FHA allows closing cost assistace from the seller up to a specific percentage of the sales price..

If you ask for too much money in closing cost and your actual expense comes in lower the money goes back to the seller. Referr back to my first sentence.

Good luck with your purchase,

Mary Beth Harrison
The Harrison Group
214-365-6599 office
1-866-433-4578 toll free
Web Reference:  http://www.DallasMative.com
0 votes
., , Lewisville, TX
Sun Sep 27, 2009
Hi Buyer,

What is allowed on an FHA 203K Loan is repairs, but those are subject to the lender's approval and the appraisal, and must be structured as an FHA 203k Home Repair Loan, so when you buy the home, the lender allows this. This must all be a part of your loan. Contact your lender to guide you further.

Best wishes!
Nicole Arenas
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