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What closing costs a seller can pay for a buyer on a FHA loan.

If you're selling your home to a buyer who is using an FHA loan, you may be wondering what closing costs you're allowed to pay for them. FHA loans are popular among first-time homebuyers because they require a lower down payment and have more flexible credit requirements than traditional mortgages. However, these loans come with certain rules about who can pay for closing costs.

In this blog, we'll explore what closing costs a seller can pay for a buyer on an FHA loan and how you can optimize your content for search engines to reach more potential readers.

What Are Closing Costs?

Before we dive into the specifics of what closing costs a seller can pay for on an FHA loan, let's first define what closing costs are. Closing costs are the fees and expenses associated with finalizing a real estate transaction. These costs are typically paid by both the buyer and the seller and can include items such as:

  • Loan origination fees
  • Appraisal fees
  • Title insurance
  • Property taxes
  • Homeowner's insurance
  • Attorney fees

The specific closing costs that apply to your transaction will depend on factors such as your location, the value of the property, and the terms of your loan.

What Closing Costs Can a Seller Pay for a Buyer on an FHA Loan?

If your buyer is using an FHA loan to purchase your home, there are limits on the amount of closing costs that you can pay for them. According to the FHA, sellers can contribute up to 6% of the purchase price of the home towards the buyer's closing costs, provided certain conditions are met.

First, the contribution cannot exceed 6% of the lesser of the appraised value of the home or the sales price. For example, if the appraised value of the home is $200,000 and the sales price is $190,000, the seller can contribute up to $11,400 towards the buyer's closing costs (6% of $190,000).

Second, the seller's contribution cannot be used to cover the buyer's down payment or any part of the upfront mortgage insurance premium (UFMIP).

Third, the seller's contribution must be disclosed on the HUD-1 settlement statement and cannot be used to inflate the sale price of the home.

By following these simple rules, a FHA home buyer and have the seller pay a majority if not all of the buyers closing costs on their mortgage.  If you have further questions, please call 1st Choice Mortgage, as we are the FHA experts for Idaho.

Link here is more information about FHA home mortgages.

And if you need down payment assistance, we have that available also, link her for downpayment assistance information.

Posted by 375loan at 3/10/2023 3:31:00 AM


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