FHA Loan Requirements for Sellers

by Shauna Zamarripa ; Updated July 27, 2017

When using an FHA secured loan on a property, the buyer and seller of the property must adhere to certain rules. A truly motivated seller can use the tools that FHA provides in order to assist in facilitating a successful transaction on her property.

Seller Contributions

The seller can contribute up to 6 percent of the sales price toward a buyer’s closing costs. This comes out of the proceeds of the sale, but the seller can use this as a negotiating tool in order to help a home sell.

Seller Repairs

The seller is responsible for major repairs to the property. However, in place of incurring massive costs for expensive items, the seller can purchase a home service plan and pay a small deductible for each repair.

Home Service Plan

The seller can also transfer a home service plan to a buyer of her property as an incentive to purchase. Most service plans cost less than $400.00 per year, and these plans cover all major items in a home.

Non-realty Items

Sellers can also include non-realty items in a FHA transaction that can be added to the appraised value of a property. Common examples of additions are major appliances such as refrigerators or washers and dryers.

Interest Rate Buydown

The seller can contribute funds to buying the interest rate down for a buyer to his property. While this does come at a cost, to the seller, the cost may still be less than having to take a reduced sale price on the property.

Expert Insight

Sellers willing to research FHA financing options can find themselves netting more money off of the sale of their property than with some other loan alternatives. Speak to a real estate professional about the benefits of offering FHA financing.