When negotiating the purchase of any home, one of the most effective tools to reducing the acquisition cost of a home is using the FHA Loan combined with seller concession.

The average home has a total cost of anywhere from 3 to 6% in 3 party acquisition costs. These costs are addressed in the Closing Cost section of this site.

By using HUD's guidelines, the average borrower can save a significant amount of money by having a seller pay these typical closing fees.

Be sure, when negotiating your purchase contract, you ask for closing costs concessions. Most lenders, including FHA HUD Insured loans, allow up to 6% in seller concessions.

If you don't have the funds to cover these costs, you most certainly want to have these fees paid by the seller.

These concessions can pay the actual costs to close on your home purchase, and your prepaid items which include home owner insurance, and property taxes through the end of the tax year.

Seller Concessions Example

For Example, if you're purchasing a home for $100,000.00 your typical costs to close would break down similar to this:

3% down payment - $3000.00
5% closing costs - $5000.00

Total Cost to Close - $8000.00

By negotiating a closing cost concession into your contract, you can reduce the amount of funds you need to close to just your down payment.