| Yes, the seller can contribute to the buyer's closing | | | | combined loan-to-value ratio) is greater than 90 |
| costs and more in many cases. The next question that | | | | percent;six percent of the lesser of the property's |
| comes to mind that I'm sure your wondering is; "How | | | | sales price or appraised value for a mortgage secured |
| much can the seller contribute to the buyer in a home | | | | by a principal residence or second home, if the |
| sale?" The answer to that question isn't so easy and | | | | loan-to-value ratio (or, if applicable, the combined |
| my answer would be it depends. According to Fannie | | | | loan-to-value ratio) is in the range from 76 percent to |
| Mae guidelines we have to determine a few things. | | | | 90 percent; ornine percent of the lesser of the |
| First, is the property an investment property, primary | | | | property's sales price or appraised value for a |
| residence, or secondary residence? | | | | mortgage secured by a principal residence or second |
| Second, after the contribution, what is your loan to | | | | home, if the loan-to-value ratio (or, if applicable, the |
| value ratio going to be? i.e. 70, 80, 90% | | | | combined loan-to-value ratio) is 75 percent or less |
| After we answer those two questions we can refer | | | | As you can see, the answer varies somewhat |
| to Fannie Mae guidelines, which state the following: | | | | depending on the situation. Some of you may now be |
| The maximum allowable contributions that interested | | | | asking; "What about Undisclosed Seller Contributions?" |
| parties may make for a conventional mortgage are | | | | My answer to that would be under Fannie Mae |
| limited to:two percent of the lesser of the property's | | | | guidelines undisclosed seller contributions such as |
| sales price or appraised value for a mortgage secured | | | | moving expenses, silent mortgages, abatements and |
| by an investment property;three percent of the lesser | | | | other various fees paid by the seller are not allowed. |
| of the property's sales price or appraised value for a | | | | Therefore your interest rate will be higher, because |
| mortgage secured by a principal residence or second | | | | you will have to be financed into a non-conforming loan |
| home, if the loan-to-value ratio (or, if applicable, the | | | | and pay a higher interest rate. |