The following is a guideline you may use in considering what the maximum is the seller may contribute to your closing costs and, thereby, reduce the cash you would need at the settlement table. It, in no way, is an indication that the seller will contribute the maximum amount allowed. What a seller may consider contributing will depend on a lot of factors, including:

• The sales price you offer for their home;
• The equity they have in their property;
• Their motivation to sell; and
• The cash they need from the sale of their home for either the home they're buying or possibly retirement.

You will probably find that the average being contributed today based on a reasonable sales price offered is between 1.5% and 2% of the sales price. Please consult with your lender and Realtor regarding this subject.

With a 5% down payment, Fannie Mae and Freddie Mac will allow the seller to contribution up to 3% of the sales price (not including any escrows/prepaids) towards the purchasers' closing costs.

 With a 10% down payment, the allowance is 5% of the sales price (not including any escrows/prepaids).

 With 20% or more down payment, the seller may pay all the purchasers' costs.

 Please be aware that there are many types of conventional loans in the marketplace today. Some may differ from the above. Please consult with your lender to get the exact amount considering the loan program you will be using.

FHA prefers that the seller only contribute to the loan discount points. If the seller contributes more than the loan discount points, then that additional amount will be added to the sales price in calculating the purchasers' down payment.

VA allows the sellers to pay 4% of the sales price PLUS two discount points as a contribution to the purchasers' closing costs. Vets have a big advantage.

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