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Seller paid down payment?

My wife and I are currently in the beginning stages of the home buying process, we are now searching for mortgages to see how much we qualify for. We have little available for down payment so a mortgage broker is telling me that seller paid down payments are becoming popular and we should look into it. Is this true? How does it work? Anyone tried it before? Does redfin encourage or discourage this type of transaction? by sbjoe_469_628 from League City, Texas. Sep 8th 2011 Reply


Jeff Cost (midwestlender)
#39 ranked lender in Ohio - 164 contributions

To be clear and technical a seller can not pay for or gift to you a down payment. The seller can pay for your closing costs and you can also have them pay for you to buy down the rate and even on an FHA deal have them pay the FHA funding fee as long as it's on the purchase contract.Call for additional help 513-403-6260Or visit my web site for additional information. www.myenglender.com

Sep 8th 2011
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Richard Woodward (RichardWoodward)
#40 ranked lender in Texas - 106 contributions

Be very wary of any lender that tells you that the seller can pay your down payment for you. HUD, the agency that controls FHA, made it very clear that they will not allow this type of financing. However, you could possibly qualify for Texas First Time Homebuyer Program. This is a program that enables you to purchase a home in Texas with a grant loan for the down payment. For more information you can visit my site or google Texas First Time Homebuyer Program . www.mortgageprosus.com/YourDownPayment

Sep 8th 2011
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Joe Metzler (JoeMetzler)
#19 ranked lender in Minnesota - 3,876 contributions

Sounds like a little confusion on terminology. Closing costs can be rolled into the transaction under what is called "seller paid closing costs" so it is NOT an out-of-pocket expense. Down payment is something different, and the buyer always needs to pay their own down payment UNLESS using one of many special programs that either don't require a down payment - like VA loans, or USDA Rural Development loans, or if it comes from a special community program.

Sep 9th 2011
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Leonard Volodarsky (nyfha@yahoo.com)
#55 ranked lender in New York - 14 contributions

Hello,Or one more option, that I reccomend to my clients is a GIFT from a family member, friend or such. That will require Gift Affidavit from donor, sourcing the money and verifying it with the copy of withdrawal slip and deposit slip, or bank statements.

Sep 9th 2011
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Brad Cahoone (info@globalhomefinance.com)
#90 ranked lender in Texas - 1,042 contributions

TDHCA has first time homebuyer grants. There are 77 approved mortgage lenders at this time to work thru. I would steer clear of the large institutional companies like BOA, Wells and Chase as their turn times are measured in months these days. Your purchase contract will expire long before they underwrite the loan. Also, beware of national lenders or out of state loan officers. They do not know TX and could cause you serious delays or cost you the deal with their lack of knowledge of TX laws unless they can show you they have been doing loans here for years. A purchase isn't as complicated, but most of them could not do a TX A6 (cash out) loan to save their lives. Brad Cahoone -NMLS-184176 bcahoone@globalhomefinance.com - 972-724-3222 x227 - globalhomefinance.com - Global Home Finance NMLS #316441

Sep 14th 2011
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