What are the maximum allowable buyer closing cost a seller can pay when the buyer is obtaining a new FHA insured loan?
The default answer tends to be 3%, however, you have to pay attention last part. I know that HUD guidelines state the following:
"HUD allows up to 1% of the buyer's mortgage amount for closing costs to be included in the "Seller's Costs" on the HUD-1 for all transactions that involve a new FHA-insured mortgage."
Have any of you Short Sale Superstars seen anything to the contrary?
**********************************
like buttons
Replies
I am in the middle of an FHA shortsale with BOA and the Buyer is VA and they said that the 1% closing cost is not allowed to be paid to the Buyer because he is VA and if we want closing cost we must ask for a variance that will take 3 weeks, a week prior to the foreclosure date.
They wont even pay for the VA non-allowables.
The Mortgagee Letter 2008-43 restricts the closing costs to 1% on FHA Buyers. All others are restricted to 0%. You can request a variance but there are no guarantees except for a few headaches. Interesting note...they do not consider costs associated with title as part of the 1% so you can also add the attorney's fee, settlement charges, and owner's title insurance on top of the 1%. This should make up a good portion of the closing costs needed depending on the size of the loan. They usually will not pay for items associated with the loan like lender's title insurance.
ML 2008-43 simply restricts the Servicer from approving more that 1% of the Purchase Price in Seller Paid closing costs unless a Variance is approved.
If the seller has a FHA loan and the buyer is getting a FHA loan, FHA will only pay buyer concessions of 1% and there is no bending.
I specialize in PFS homes, and remember they do not pay ANY HOA fees.
Need more info send me an email at jim.miner10@gmail.com
I've always had HOA fees paid on FHA PFS in a non Super Lien State.
Brain, I specialize in FHA short sales. If the buyer is asking for a closing contribution the limit is 1%, NO IF BUTS OR ANDS!
Do not confuse HUD paying a 3% concession, they will pay up to a 3% concession but VERY IMPORTANT, a FHA short sale (PFS) is not a HUD transaction, HUD only insures the loan, the seller still owns the home. A PFS is not a HUD home.
FHA is very clear on this.
Good Luck!
Hi . I want to be clear. Why isn't an FHA short sale a HUD transaction?
Are you saying HUD will pay 3% if its a traditional sale or a short sale that is not FHA?
and HUD will only 1% if its an FHA short sale?
With an FHA Seller and a VA or Conventional Buyer, will FHA pay 1% or anything for closing cost on a short sale?
Please explain James, thank you
James. They will make exceptions. I recently closed on a FHA PFS with Chase as the lender and they allowed a 3% concession to the buyer form the seller. And the buyer was using conventional financing.
I am doing a short sale, Seller has an FHA loan, Buyer has a new VA loan and BOA says they can only pay 1% of the closing cost, is this true? HELLLLP
THANKS,
Gail
James,
Thanks for weighing in. I was starting to feel a bit crazy and the agent on the other side of the offer on this one had a lender telling her that I didn't know what I was talking about. I had only been burned by it once previously, however, once was enough to remember to pay attention to type of financing and requested buyer paid closing costs.
Now if only HUD would give us their 2 cents so we can have a definitive, because as you can see, many agents believe otherwise and some seem to have proof of such (I'm not doubting any of the responses here as many of these guys are known resources. Just a point of precaution, I would hope that everyone verifies their claims against actual transactions prior to posting.).
-
1
-
2
of 2 Next