Seller Paid Closing Costs

Many buyers (particularly first-time buyers) are short the cash they
need for the down payment and closing costs. One way to overcome this
cash shortage is for the seller to pay a portion of the closing costs.
How much the seller is allowed to contribute depends on the type of
mortgage loan.
Conventional Loans
On a conventional loan, the seller can only pay non-recurring costs.
These do not include pre-paid items or items to be paid in advance
(such as mortgage insurance or hazard insurance). The seller's
contribution is limited to the amount the buyer is putting down. If
the buyer puts 10 percent or more down, the seller may contribute up
to 6 percent. If the buyer puts less than 10 percent, the most the
seller may contribute is 3 percent.
VA Loans
On a VA loan, the seller may pay all the closing costs (this is known
as a "VA-No-No" - the buyer pays no down payment and no closing
costs). Sellers who agree to pay the closing costs often put a ceiling
on the amount they will pay.
FHA Loans...

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