We had a borrower come to us over the weekend who wanted to buy a $400,000 home with FHA financing, and she had exactly $14,000 for a down payment (just enough). She had no money for closing costs which will be about $10,000 for non-recurring and recurring costs (including impounds).
The solution in this competitive market is not to ask the seller for closing costs but to instead get a lender credit for closing costs (recurring and nonrecurring). The more we credit, the higher her rate will be of course.
At 3.75%, at no points, we could credit about $2,500 for closing costs.
At 4.0%, at no points, we could credit about $7,000 for closing costs.
At 4.125%, at no points, we could credit about $8,500 for closing costs.
At 4.25%, the credit would be too large (wasted) at over $13,500.
Please feel free to email me for further explanation.
Founder/Broker | JVM Lending
(855) 855-4491 | DRE# 01524255, NMLS# 335646