Subsidies from seller or lender

Most programs allow the seller or lender to pay the borrower's closing costs and a small portion of the down payment. These subsidies are normally limited to 3% of the purchase price or refinance loan amount.

The primary documentation requirement for seller subsidies is an addendum or amendment to the purchase agreement. Lender subsidies normally do not need any additional documentation.

Note that if the seller subsidy is being used for the down payment, there are limits. Actually, there are minimum down payment requirements for the borrower, as described in the "Cash Gift" section of this article.

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