FHA Loan and Closing Costs (sales, payment, non-profit, 6%)

[BriGuy23]

I found the below on the FHA website. It is contrary to EVERYTHING else I have read and discussed with my relator. At face value the below is telling me that if I go FHA I cannot ask the seller for closing costs? This doesn't sound right to me. Has something changed?

Any thoughts?

Thanks!!


Elimination of Non-profit Down Payment Assistance
On July 30, 2008, President Bush signed H.R. 3221 - Housing and Economic Recovery Act of 2008. Section 2113 of the bill prohibits seller-funded DPA (Down Payment Assistance) for loans backed by the Federal Housing Administration. Prior to this bill, the seller could contribute up to 6% to the buyer to cover either a down payment or closing costs on an FHA loan. The changes became effective October 1, 2008.

[vllygrrl]

Actually, what we were told, both by our realtor and our mortgage broker, is that with the FHA mortgage, the sellers can contribute up to 6% for closing costs, but that money cannot be used toward your 3.5% down payment.

[cleanhouse]

Originally Posted by vllygrrl

Actually, what we were told, both by our realtor and our mortgage broker, is that with the FHA mortgage, the sellers can contribute up to 6% for closing costs, but that money cannot be used toward your 3.5% down payment.

Is that 6% of the total sale price or 6% of the total closing costs?

[Trogge]

Originally Posted by BriGuy23

I found the below on the FHA website. It is contrary to EVERYTHING else I have read and discussed with my relator. At face value the below is telling me that if I go FHA I cannot ask the seller for closing costs? This doesn't sound right to me. Has something changed?

Any thoughts?

Thanks!!


Elimination of Non-profit Down Payment Assistance
On July 30, 2008, President Bush signed H.R. 3221 - Housing and Economic Recovery Act of 2008. Section 2113 of the bill prohibits seller-funded DPA (Down Payment Assistance) for loans backed by the Federal Housing Administration. Prior to this bill, the seller could contribute up to 6% to the buyer to cover either a down payment or closing costs on an FHA loan. The changes became effective October 1, 2008.

The quote you have is for down payment assistance (DPA). DPA is no longer allowed.

Seller paid closing costs ARE still permitted by FHA. The seller can contribute up to 6% of the sales price toward your closing costs and pre-paid items. You, the buyer, have to put at least 3.5% into the deal as a down payment.