For an FHA loan, how much can a seller contribute to the borrower's closing costs?

In the case of an FHA loan, the guidelines allow sellers to contribute up to 6% of the sales price toward the borrower's closing costs. This policy is designed to help homebuyers manage their expenses and make it more feasible for them to purchase a home, especially since FHA loans are often sought by first-time buyers or those with limited financial resources.

This 6% cap includes contributions that can cover various closing costs such as loan origination fees, title insurance, and other related expenses. It is important for both buyers and sellers to understand this guideline as it can influence negotiations during the sale process and the overall affordability of the transaction for the buyer.

Understanding the significance of this limit is crucial for both borrowers and sellers in determining how much assistance can be provided, which can play a substantial role in facilitating the home purchase.