Seller/Interested Party Contributions

Seller concession is negotiated within your contract.  It is simply a way to finance your closing costs and pre-pay expenses, thereby, lowering funds needed from you to close. 

  • Closing Cost = all expense of purchasing your home, (attorney, state, county, lender, etc).  Note that some of these fees are tax deductible, such as my origination.
  • Pre-Pay Items = days of interest for month purchasing home, and 1-year home owners insurance policy.

For example:  A $200,000 offer with no seller concession is the same as a $207,000 offer with $7,000 of seller concession.  In the second example, your loan amount is raised $7,000 which is routed back to you as seller concession, lowering your funds to close by $7,000.  We will discuss in detail but this gives you an idea of how it works!  Concessions over the amount needed are returned to seller.

Each loan type has maximum contribution allowed, see below.   

  • FHA & USDA
    • Interested parties may contribute up to 6% of the purchase price toward the borrower's origination fees, other closing costs, discount points, and pre-pays.
  • VA
    • There is no limit on interested party contribution up to the cost of customary closing and pre-paids.  Also included is anything of value added to the transaction by the builder or seller for which the buyer pays nothing additional and which the seller is not customarily expected or required to pay or provide.
  • Conventional   (CLTV = total loan amount)
    • Investment Property
      • 2%   Max contributions, no matter the CLTV
    • Owner Occupied & 2nd Homes
      • > 90% CLTV = 3% max contributions
      • <= 90% and >75% CLTV = 6% max contributions
      • <= 75% CLTV = 9% max contributions