Can you get a buyer rebate with an FHA loan?
FHA loans are popular with first-time buyers because of the low down payment. A buyer rebate can still be used, within FHA's rules.
The rules
FHA treats credits from the seller, builder and real estate agents as interested party contributions. Total contributions are typically capped at 6% of the price, and they generally have to go toward closing costs, prepaid items or discount points, not your down payment.
In practice
On a $380,000 Florida purchase with a 2.5% buyer agent fee, the 25% rebate is about $2,375. That fits easily under the cap and is usually less than your closing costs, so it lowers your cash to close.
What can go wrong
- A large seller concession plus the rebate pushes you over the cap.
- Your closing costs are lower than the credits.
- The lender is not told until the last week.
Tell your loan officer about the rebate at pre-approval.