What are the Max Seller Concessions on a VA loan in Florida?
What are max seller concessions on a VA loan in Florida? Is there a VA seller concession limit?
As the housing market continues to change, we are receiving an increase in requests for homebuyers that want to negotiate for seller concessions (i.e., seller paid closing costs).
However, this topic brings quite a bit of confusion when dealing with VA loans. In today’s short video, I will walk you through the specifics and share with you some qualifying details 
and explain what the maximum seller concessions are on a VA loan.
Now, if you have a qualifying question or a loan approval that is experiencing trouble, remember to let our experience be a resource and take advantage of our Free Second Opinion Service (“SOS”).
Just call, text, or email to discuss your scenario and let us show you the “Metroplex” difference!
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What are the Max Seller Concessions on a VA loan in Florida?
Unfortunately, there is a myth passed on by many lenders that the maximum VA will allow a seller to pay is 4% towards closing costs, but today we will “bust” that myth and dive into the details.
As a starting point, VA guidelines define a seller concession as the following:
“a seller concession is anything of value added to the transaction by the builder or seller for which the buyer pays nothing additional and which the seller is not customarily expected or required to pay or provide”
VA includes the following examples of what could be paid through maximum seller concessions on a VA loan:
- payment of the buyer’s VA funding fee
- prepayment of the buyer’s property taxes and insurance
- gifts such as a television set or microwave oven
- payment of extra points to provide permanent interest rate buydowns
- provision of escrowed funds to provide temporary interest rate buydowns, and
- pay off of credit balances or judgments on behalf of the buyer.
Yes, believe it or not, a seller can pay off a veteran’s credit balances at closing through their maximum seller concessions on a VA loan which includes credit card balances, auto loan balances, collections, and more! VA also states that, “any seller concession or combination of concessions which exceeds four percent of the established reasonable value of the property is considered excessive, and unacceptable for VA-guaranteed loans.”
However, many lenders mistakenly conclude that there is a 4% cap on what a seller can pay, but because “seller concessions do not include payment of the buyer’s closing costs, or payment of points as appropriate to the market” this shows that the 4% cap only applies to certain charges such as those discussed.
Additionally, common examples of closing costs which are not included within the 4% cap would be title company charges, property surveys, recording fees, and loan charges.
In summary, if you have a veteran who wants to purchase a home with a no down payment VA loan, the flexibility allowed can help them achieve homeownership and reduce their VA loan closing costs through what a seller is allowed to pay for at closing.
As a USDA, FHA, and VA Approved Lender in Florida, Tennessee, Alabama, and Texas, let our experience and expertise go to work for you!
Just call, text, or email to discuss your scenario and let us show you the “Metroplex” difference!
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