FHA Seller Concessions in Florida: What Can the Seller Pay?

What does the FHA 6% rule actually cover?

HUD’s Single Family Housing Policy Handbook 4000.1 sets the interested-party contribution standard for FHA forward mortgages. Eligible uses include origination fees, other closing costs, prepaid items and discount points. The limit also counts certain seller-paid interest rate buydowns. The rule applies to combined contributions from interested parties; it is not a separate 6% allowance for each party.

Can I put the seller credit toward my 3.5% down payment?

No. HUD says interested-party contributions may not be used for the borrower’s minimum required investment. If your FHA file qualifies for a 3.5% minimum investment, you still need an acceptable source for that amount. A gift or a qualifying assistance program may have different rules, but a seller concession does not become your down-payment funds. I separate the down-payment plan from the closing-cost plan before an offer goes out.

What does 6% look like on a Florida offer?

On a hypothetical $350,000 purchase, 6% is $21,000. That does not mean the buyer should request $21,000 or will receive $21,000. If eligible costs and prepaids total only $11,000, a larger credit may not be usable as ordinary closing-cost help and may be treated under HUD’s inducement-to-purchase rules. The lender must review the actual contract and settlement figures. I would ask for a precise estimate before negotiating the number.

Seller credit or lower price: which is better?

A seller credit can lower cash needed at closing; a price reduction can lower the amount financed and may protect against an appraisal gap. The better option depends on your cash position, payment, rate structure, appraisal and how long you expect to keep the loan. The CFPB cautions that a seller credit may be offset by a higher agreed price. I ask the agent and buyer to compare both offers on the same estimated Loan Estimate rather than focus only on the largest credit.

When does a rate buydown make sense?

A permanent buydown pays discount points to reduce the note rate under the lender’s pricing. A temporary buydown changes initial payments for a defined period under a separate arrangement; it does not erase the permanent note-rate obligation. Either may use seller funds only when allowed by the current FHA, investor and lender rules. I would show the buyer the full later payment, not only the discounted first-year figure, and verify qualification on the applicable payment.

What should be in the offer and the final paperwork?

Ask the agent to write the proposed seller contribution clearly in the contract and have the lender review it before the offer is final. I then check the Loan Estimate’s estimated cash to close and the Closing Disclosure’s seller-paid lines. The CFPB Loan Estimate guide explains where seller credits appear. Last-minute changes can affect the figures and the closing timetable, so the closing team should reconcile them early.

Questions buyers ask me

Related Florida FHA guides

• Florida FHA closing costs
• Buying when mortgage rates rise

Sources I used

• HUD Single Family Housing Policy Handbook 4000.1
• CFPB: Seller credits and closing costs
• CFPB: Learn about loan costs
• CFPB: Loan Estimate explainer

Program details and rates can change. I verify current lender and program requirements for each file before discussing an application.