VA Loans – Part II
Must Read posts: 6 BIG advantages of VA loans

For a Free Colorado Springs Relocation Guide, Email Kathy Torline at KTorline@msn.com

Must Read Article:  6 BIG advantages of VA loans

One of the biggest areas of confusion about VA loans is the Seller Concessions.   In the recent class I was in where the instructors were from the Denver VA office, they did a great job of explaining what can and what can’t be used as people-uid-1639791part of Seller Concessions.

VA Mortgages have a limit of 4% of the Appraised Value that the seller can contribute to a buyer on a VA purchase without it being considered excessive.   For VA purposes, a seller concession is defined as anything of value added to the transaction which the buyer pays no additional amount and which the seller is not customarily expected to pay.   Some examples of concessions include seller payment of the following:

  • Buyer’s VA funding fee
  • Buyer’s prepaids (Taxes and Insurance)
  • Buyer’s temporary interest buydown fees
  • Buyer’s debts

The Buyer’s debts can be included to be paid by the seller, but this amount counts towards the 4% Seller Concession.   Keep in mind that in a buyer’s market where the sellers agree to pay for all closing costs & pre-paids, the pre-paids can eat the concession up to 2% to 3% out of the 4% cap. 

 

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