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December 16, 2022

Using Seller Concessions with VA Loans

Today I will review some of the options a home buyer has when using seller concessions alongside a VA loan. VA loans tend to be the most friendly when gathering helpful options in borrowing money for a home mortgage. The paperwork tends to be stricter than a conventional loan, such as the requirements for an appraisal, but when it comes to getting helpful options, VA is usually the best way to go.

Seller Concession Options When Using a VA Loan

Rate Buydowns: When a seller offers seller concessions, the buyer can use those concessions to buydown the interest rate in either a permanent rate buydown or a temporary rate buydown.

Closing Costs: Every loan has costs associated with processing the transaction. Seller concessions can be used to cover those costs up to four percent of the VA loan amount.

VA Funding Fee: Using a VA loan to purchase a house requires paying the VA Funding Fee. This amount varies, but a borrower can pay that fee with seller concessions.

Pay Down Debt: As far as I know, a VA loan is the only option that allows a borrower to use seller concessions to pay down other personal debt, such as credit cards, personal loans, etc. Using seller concessions in this way lowers the DTI (Debt-to-Income Ratio) much like how debt-consolidating refinance options work. Lowering the DTI makes the ability to repay easier, which means the borrower can qualify easier for the home loan.

What Is a Seller Concession or Credit?

A Seller Concession is an amount of money that a seller chooses to credit the buyer. This credit comes up at closing, so when the Title company closes the loan, and the purchase money from the mortgage company is transferred to make payment for the house, the buyer gets a credit in the amount in which the seller agreed to credit the buyer.

Many Ways to Structure a Home Loan to Benefit a Home Purchase

There are many options in structuring a loan to benefit the borrower, which I call Juicy Solutions! Take a peak around the website to learn more about your options in borrower money to buy a house before home prices appreciate out of your reach.

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Funding Juicy Solutions LLC

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email: info@fjsolutionsllc.com

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