Interested Party Contributions

Can a seller pay your closing costs? Yes, up to a point. The max depends on your loan type and your down payment. Here's the full breakdown.

What Are Interested Party Contributions?

Interested party contributions are the max someone can contribute toward the buyer's closing costs. An interested party is anyone with a financial stake in the transaction, like an agent or the seller.

Max Contribution Limits by Loan Type

Conventional (Primary or Second Home)

• Down payment less than 10%: max contribution is 3%
• Down payment 10% to 24.99%: max contribution is 6%
• Down payment 25% or more: max contribution is 9%

Conventional (Investment Property)

• Any down payment above the minimum required: max contribution is 2%

FHA

• Minimum down payment is 3.5%
• Max contribution is 6% of the sales price

VA

• Minimum down payment is 0%
• Max contribution is 4% (with some extras, see notes below)

USDA

• Minimum down payment is 0%
• Max contribution is 6% of the sales price

The Rules That Apply to Every Loan Type

On every loan type, contributions can't exceed the buyer's actual closing costs and prepaids. They can't count toward the down payment or give the buyer cash back.

Not sure what your closing costs will actually run? Use the payment and closing cost calculator to get a real number before you ask for a credit.

VA Loans Have a Special Twist

For VA loans, normal customary closing costs are uncapped. But closing costs beyond the standard, like paying for the funding fee, paying for a rate buydown, or buying down the VA buyer's debts (yes, excess credit can go toward debt payoff for VA buyers), are limited to 4%.

If you're trying to figure out how to stretch your down payment further, check out the down payment assistance guide for programs in all 50 states.

Hope this helps.

Sam

Originally shared by u/SamTMortgageBroker in r/NewbHomebuyer — view the original thread.