Funds Required to Close on a FHA Home Loan
By admin | April 17, 2008
FHA requires a down payment of 3% of the sale price be paid; and will allow this to be in the form of a gift from a family member, significant other or grant; however, it cannot be paid by the seller or lender. FHA will also allow a seller to pay up to 6% of the sale price towards closing costs and prepaids. Without any contributions from the seller, you can expect to pay approximately 2% more at closing.
Closing costs are those fees charged for services provided and can be from the lender, title/escrow company or third party vendor such as the credit reporting agency or appraiser.
You will also be required to establish an escrow (prepaids) account when you close. This usually consists of 3 months property taxes and 4 months property insurance.
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