What costs can a seller or other interested party pay on behalf of the borrower?

Interested parties refer to sellers, real estate agents, builders, developers or other parties with an interest in the transaction.  Interested parties may contribute up to 6 percent of the sales price toward the borrower’s origination fees, other closing costs and discount points. The 6 percent limit also includes:

  •     Payment for permanent and temporary interest rate buydowns, and other payment supplements;
  •     Payments of mortgage interest for fixed rate mortgages;
  •     Mortgage payment protection insurance; and
  •     Payment of the Upfront Mortgage Insurance Premium (UFMIP).

Interested party contributions that exceed actual origination fees, other closing costs, and discount points and Interested party contributions exceeding 6 percent are considered inducements to purchase and result in a dollar-for dollar reduction to the adjusted value of the property before applying the appropriate LTV percentage.