What is a 3% seller concession?

What is a 3% seller concession?

If the seller concessions max out at 3%, the seller can contribute up to 3% of $150,000, or $4,500, to help with closing costs. Here are the seller concession limits for some common loans.

What is 3% of closing costs?

Closing costs are processing fees you pay to your lender when you close on your loan. Closing costs on a mortgage loan usually equal 3% – 6% of your total loan balance. Appraisal fees, attorney’s fees and inspection fees are examples of common closing costs.

How much is seller concession?

The FHA limits seller concessions to 6% of the loan amount. Should your concessions exceed 6%, it will result in a dollar-for-dollar reduction to your home loan purchase price.

How does seller contribution work?

A seller contribution is when the seller of property chips in to pay a portion of the closing costs, usually as an alternative to a lower purchase price.

Why would seller pay closing costs?

By having the seller pay for certain items in your closing costs, it enables you to make a higher offer. Therefore, you’ll effectively be paying your closing costs throughout the life of the loan rather than upfront at the closing table because they’re now built into your loan amount.

What is the maximum a seller can contribute to closing costs?

Depending on the buyer’s loan-to-value (LTV) ratio and downpayment, a seller can contribute anywhere from 3% to 9% of the sales price in closing costs. FHA and USDA loans allow the seller to contribute up to 6% of the sales price toward closing costs, prepaid expenses, discount points, etc.

What is the advantage of the seller paying closing costs?

What is buyers concession?

Buyers can request seller concessions to help reduce the amount of cash needed at closing. For example, if the buyer has $22,000 in total for the purchase of a home and is putting $18,000 down, they can request the remaining funds needed for closing costs as a seller concession.

How much does FHA allow for seller concessions?

Seller concessions are limited to six percent of the sale price of the home and while the concessions can be used to pay some of a borrower’s closing costs, these funds can never be used as a down payment for an FHA mortgage.

How much are seller concessions on conventional loans?

What is the maximum seller concession on a conventional loan? If your down payment is less than 10%, the maximum seller contribution is 3%. If your down payment is 10-25%, the seller can contribute up to 6% of the purchase price. And for down payments greater than 25%, the maximum seller concession in 9%.

How much can the seller contribute to closing costs?