FHA Seller Concessions

FHA Seller Concessions

FHA allow 3.50% down payment for a purchase of a home. FHA also allows for a 6% seller's concessions. So, if you want to buy a home for a $100,000.00 you will need $3,500.00 for the down payment. The down payment can be a gift from a family member. Your closing cost can be rolled into your loan. So, the only cash you will need to buy a $100,000.00 is around $3,500.00.

The seller must agree to a seller's concessions and in the above case you are allowed a concession of up to $6,000.00 for closing cost.

Seller Concessions in Writing

When you find a property you want to make an offer on you must include the seller's concession in the sales contract. You can write it in two ways as a dollar amount (seller will pay $6,000.00 for closing cost) or you can write it in a percentage amount (seller will pay up to 6% of the purchase price for closing cost).

Generally, a borrower who has made timely payments for the last 12 months serves as a guide and demonstrates their willingness to repay future credit obligations. New FHA policy changes require minimum FICO credit score to be 580 for 96.5% down payment. These Fico credit score requirements went into effect in the spring 2010.

A perfect credit score is not needed for an FHA loan approval. In fact, even if you have had credit problems, such as a bankruptcy, it's easier for you to qualify for a FHA loan than a for a conventional loan. Sometimes score down to 500 are accepted if there are compensating factors that offset the credit risk.

Credit score below 580 require a larger (10)% down payment on a purchase. Seller concessions are allowed with credit score below 580.

Items you will need to Purchase a home:

* One Month Pay Stubs
* W2's & Tax Returns for the Last Two Years
* Two Months Banks Statements (all pages)
* Purchase Sales Contract
* Verifiable Rental History
* Copy of Social Security Number
* Copy of Driver's License

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2019 FHA Credit Score needed to buy
a condo or refinance


FHA loan requirements new borrowers with less than a 580 credit score will be required to put down at least 10%

FHA requires a minimum credit score of 500 to buy a home or refinance


Bankruptcy

Chapter 7 Bankruptcy at least two years must have elapsed since the discharge date


Foreclosure

Foreclosure must have been resolved for at least 3 years

Government loan: Seasoning is determined by the date the claim was paid

Loans other than Government: Seasoning is determined by the date of sale the lender sold the property


Short Sale

FHA guidelines requires three year past from the date of sale of the property


What documentation will I need?

  • Personal tax returns for the past 2 years
  • Current pay stubs for the past month
  • Bank statements for last 2 months (all pages)
  • Clear copy of Driver’s License (front and back)
  • Clear copy of SS card (front and back)

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