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FHA Closing Costs

FHA closing costs guidelines are very complicated and sometimes confusing even for experienced mortgage professionals.  This page will contain some of the basic details so you can make sure you are not being taken advantage of and that the fees being charged to the buyer and/or seller are correct.  Your good faith estimate prepared by the lender will have it all laid out for you but there are some things you should be aware of .

FHA Maximum Seller Contributions

FHA guidelines allow the seller or other third parties (real estate agents, builders, etc.) to contribute up to 6% of the sales price toward the buyers closing cost, discount points, and prepaids.  The seller is also allowed to pay the upfront mortgage insurance premium (MIP).

FHA Financing Concessions:

  • Closing costs:  does not include non-allowable fees
  • Prepaids
  • Discount points'
  • Up Front Mortgage Insurance Premium (MIP)
  • Buy Downs
  • First yr advanced payments of home owners association fees and property taxes. ref: Mortgagee Letter 97-26  for details.

FHA Sales Concessions:

Sales concessions may also be paid by the seller but their total value must be deducted from the sales price before computing the maximum loan amount.

  • Buyer broker fees
  • Excess rent credit
  • Decorating allowances
  • Moving expenses
  • Personal property such as cars, boats, mowers, furniture, televisions, etc., given by the seller.
  • Real Estate commission on buyers current home

There may be some exceptions based on local customs or on items that affect value..  Check with your local HUD office.

Financing Closing Costs:

Closing costs may be financed into the loan as long as the max loan amount is not more than 96.5% of the appraised value and the buyer contributes a minimum of 3.5% into the transaction.

  • Credit Report
  • Appraisal fee
  • Inspection fees
  • Origination fee
  • Home inspection service fee
  • Deposit verification fee
  • Title Insurance
  • Pest inspection
  • Survey
  • Recording fees
  • Attorney's fee
  • Tax Stamps and Mortgage taxes
  • Test and certification fees
  • Flood Certification

Please check with you local Hud Office for exceptions to this list.

 
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