HUD just announced that it plans to reduce seller concessions on FHA loans in the near future. They did not issue specifics. FHA currently allows seller concessions of up to 6% of the purchase price of the home. In July of 2010 they proposed lowering that amount to 3%, but that never came to fruition. I inserted the paragraph from their recent publication below.
Reducing Seller Concessions
In another move to prudently manage risk, FHA will issue a revised proposed rule on seller concessions. This proposal, which will bepublished in the Federal Register in the near future and have a 30-daycomment period, is in response to comments received following thepublication of FHA’s July 15, 2010 proposed rule on the same topic.The purpose of the proposed rule is to reduce the maximum allowableseller concession for single family mortgages from its current level toone that is more appropriate and better manages risk. The currentlevel exposes the FHA and borrowers to excess risk by creatingincentives to inflate appraised value.
