I received this little cheat sheet from Keith Turner from McCue Mortgage and I thought it was a good one to share with Ledyard buyers and sellers. When negotiating an offer, buyers often ask sellers to assist with closing costs. While this is a good way to get help with a home purchase, there are limits of how much money the seller can contribute.
FHA – 6%
VA – 4%
USDA – 6%
Conventional (with less than 10% down payment) – 3%
Conventional (with 10% down payment or more) – 6%
CHFA/HFA (with less than 10% down payment) – 3%
CHFA/HFA (with 10% down payment or more) – 6%
*CHFA doesn’t have any overlays/limits themselves. They will just follow the insurer, so for CHFA/FHA the limits follow the FHA rule of 6%, for CHFA/VA they follow the VA rule of 4%.
So for example: with a Sales Price of $100,000 on an VA mortgage, the seller can only contribute up to $4,000 towards your buyers closing costs.