In other words, what is the maximum that a seller can contribute to a borrower who is getting a VA Loan.
On a VA loan, the seller may pay all of the veteran borrowers normal and customary closing costs. However, the VA also says that, in addition to normal and customary closings costs, the seller may pay up to 4% of the purchase price in “seller concessions”
According to VA guidelines, the 4% rule only applies to items such as:
- Prepayment of property taxes and insurance
- Appliances and other gifts from the builder or seller
- Discount points above 2% of the loan amount
- Payoff of the buyer’s credit balances or judgments
- Payment of the VA funding fee
To recap, the seller may pay all normal and customary closing costs, but are limited to 4% of the purchase price on items considered to be a “seller concession”.
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