Mortgage Myth Busters: FHA Rumors – Seller concessions on FHA Loans @ 3 percent –

FHA Rumors – Seller concessions on FHA Loans @ 3 percent –

FHA loans - FHA mortgages


FHA Loans still allow a 6 percent seller concession. Yes, there has been talk of FHA lowering the seller concessions down to 3 percent across the board. This was first talked about in February of 2010 and was placed for public comment in July of 2010. The end result is that it still hasn’t been changed as of today, February 8th, 2011. Yes, some lenders have what are called lender-overlays, which brings me to this update.

What one needs to be careful is where they get their mortgage information from, no matter if it’s from a loan officer or a real estate agent. Just the other day I came across an answer from a realtor stating that FHA allows up to 3 percent from the seller as a seller concession, aka seller paid closing costs. As I have stated, this is 100% incorrect and can sometimes vary from lender to lender, which is called a lender overlay. This realtor claims that one of the big banks is stating that the FHA seller concession is 3 percent. Just because a big bank and or mortgage lender has this guideline, doesn’t mean that it’s the same for everyone. This realtor told me that she is just stating what her loan officer has told her.



Summary : Seller concessions for FHA loans is still 6 percent.  I highly advise that you be very careful when speaking to a realtor about mortgage specifics. You should be getting your mortgage questions answered directly from a loan officer. And even then, you still need to be careful. In the scenario above, if you were to only talk to the loan officer from this large bank, you would think that the FHA seller concession or seller paid closing costs would be the same for everyone. Keep in mind that FHA makes up the rules and guidelines and it’s up to the mortgage lenders and banks to follow them, unless they come up with their own additional guidelines which they are allowed to do. As mentioned above, this is called a lender overlay.





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Copyright © 2011 by Jeff Belonger of Infinity Home Mortgage Company, Inc

Comment balloon 11 commentsJeff Belonger • February 08 2011 11:32PM


good read. thx, mark and karen rockford, il 

Posted by Mark Rubley, Rockford Realtor,Rockford Il Real Estate Home Team (Rockford IL Real Estate Team Leader serving all of the North Central Illinois Stateline Area. Listing Specialist.) almost 10 years ago

Your summary is correct. Get mortgage info from the lender, not a Realtor, or anyone else. We just sell 'em, not write the FHA lending rules.

Posted by Jon Quist, Tucson's BUYERS ONLY Realtor since 1996 (REALTY EXECUTIVES ARIZONA TERRITORY) almost 10 years ago

Hey Jeff,

Good info for anyone.

Earlier today we had a rep from FHA in Santa Ana, CA our region. She was great and explained the FHA guidelines and the lender "over lay" requirements for some. Good stuff!

Posted by Lynda Eisenmann, Broker-Owner,CRS,CDPE,GRI,SRES, Brea,CA, Orange Co (Preferred Home Brokers) almost 10 years ago

That's so true Jeff.  We need a constant reminder that each person in each profession should keep to what they know and not cross lines into other areas of expertise.

Posted by Mark Organek, It's not a game, it's your life. (And the United States of America) almost 10 years ago

Jeff in case you did not realize this besides @massrealty on twitter I am also @realtyfan. I was the one who re-tweeted you yesterday:)

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) almost 10 years ago

Jeff, always important to stay within the confines of what you know but understand if this realtor Trusts their mortgage officer they are assuming they are getting accurate info.  It's always worth to double check..thanks for the info!!

Posted by Ginny Gorman, Homes for Sale in Southern RI and beyond (RI Real Estate Services ~ 401-529-7849~ RI Waterfront Real Estate) almost 10 years ago

Thanks for the info Jeff.  I've been hearing the rumors for a while and some do think they are already in place.

Posted by Gabe Sanders, Stuart Florida Real Estate (Real Estate of Florida specializing in Martin County Residential Homes, Condos and Land Sales) almost 10 years ago


I usually reply to each person, but this is a basic post with litte discussion about it... I do want to thank each one of you for stopping by and for commenting.

BILL... . no, I didn't know that was you... again, thanks for RT my post.


Posted by Jeff Belonger, The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans ( Social Media - Infinity Home Mortgage Company, Inc) almost 10 years ago


I don't like hearing "my lender says" when it comes to FHA loans. Often what is being said is filtered through "lender overlays". 



Posted by Steve, Joel & Steve A. Chain (Chain Real Estate Investments & Mortgage, Steve & Joel Chain) almost 10 years ago

You definitely need a good L/O who is up with what is going on... I just had a L/O tell a client that HUD was still doing the $100 downpayment program and HUD hasn't offered that program for a few months now.

Posted by Nick Good, (The Good Home Team with eXp Realty) almost 10 years ago

STEVE... .  that is usually not a good thing. Worst is when a loan officer blames something on FHA and says.. FHA says this or that, when it's the actual lender or investor.

NICK... . question about the HUD $100 down program... where did you hear this? I can still do them and checked with a buddy in GA and they can still do them in the Southeast... thanks


Posted by Jeff Belonger, The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans ( Social Media - Infinity Home Mortgage Company, Inc) almost 10 years ago