Borrowers with tight cash situations can garner extra cash for a purchase in two ways: (1) with Seller Credits; and (2) with Lender Credits.
Seller Credits can be up to 6% of the purchase price, and they can cover both Nonrecurring and Recurring (interest, property taxes, insurance) Closing Costs, in most cases. Seller Credits can ONLY be used toward closing costs, however. Credits cannot be used toward down payment funds.
We Lenders can also provide credits by bumping up our rates, and crediting our lender-paid rebate towards closing costs. We have done this many times in order to save transactions in which borrowers simply have too little cash to close. Such borrowers end up with a higher rate, but it beats the alternative of not closing at all.