Can a Seller Pay Mortgage Points for a 203b Loan Borrower?

Seller Contributions and Mortgage Points for 203b Loans

If you want to purchase mortgage points, also known as discount points on your FHA loan, you may be able to convince the seller of the property to buy them for you. One mortgage point usually costs 1% of the entire loan amount, and will reduce the interest rate of the loan between 0.125 and 0.25%.

Why Sellers Sometimes Purchase Discount Points for Buyers

A home seller may wish to purchase points for you in order to induce you to purchase the property— especially if they want to close the deal quickly. FHA rules mandate that sellers provide no more than 6% of their property’s sale price to a buyer. So, if house was being sold for $400,000, a borrower could not receive more than $24,000 in contributions from the seller. So, as long as the total seller contribution does not exceed 6%, the seller is free to pay mortgage points for the buyer.

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