Sellers can pay for the Buyer’s closing costs, but only up to a certain amount. The maximum amount is determined by the type of loan (conventional, FHA, or VA), the occupancy type (primary residence, second home, or investment property), and the size of the down payment.
Here are the maximum allowable amounts the Seller can pay towards the Buyer’s closing costs:
Conventional Loans
Primary residence or second home = 3% if the down payment is less than 10%, 6% if the down payment is between 10% -24.99%, and 9% if the down payment is 25% or more.
Investment property = 2%, regardless of the size of the down payment.
FHA Loans
Primary residence only. Maximum seller-paid closing costs are 6%, regardless of the size of the down payment.
VA Loans
Primary residence only. Maximum seller-paid closing costs are unlimited, regardless of the size of the down payment.
Important Note
If the amount the Seller agrees to pay exceeds the actual Buyer’s closing costs, the Buyer does not get the excess money at the closing. The Seller keeps the excess amount. Make sure you check with us before putting an amount for Seller-paid closing costs in a contract. Sometimes our closing costs are much less than you might think, and you don’t want to ask for too much money from the Seller.
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