One of the features of an FHA loan is the ability to have the seller pay the buyer's settlement costs.
At this time, up to 6% of the sales price can be used to cover closing costs, prepaid items (such as insurance and prepaid interest) and reserves (deposits for property taxes and insurance).
Very soon, the percentage of the sales price that can be used to pay settlement costs will be reduced to 3%. So, for example - right now, a buyer can purchase a home with a $200,000 sales price, and have the seller pay up to $12,000 of their settlement costs. Once FHA changes the rule on seller contributions, however, only $6,000 would be covered in this example.
FHA expects to make this rule change some time this summer, so it's best to act soon if having the seller pay your settlement costs on your home purchase is an important part of your house-hunting plan!
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