FHA May Ease Seller Concession Cap

The FHA announced last year that it would cut seller contributions from 6 percent to 3 percent for purchases using FHA insured loans.  Seller concessions, such as seller assistance to buyers in closing costs, play a big part in homes sales and in closing real estate transactions with FHA financing.

Rather than an across the board 3 percent ceiling on all FHA mortgages, the policy would permit higher seller contributions, probably between 4 and 5 percent, on smaller loan balances.  Meanwhile, the 3 percent cap would be mandatory on all loan amounts above some yet to be determined limit.

It is expected that FHA will announce the changes to its policy in April, 2012.