Investors who have been buying on the lower end of the scale these past couple of years might be ready to sell a few of them. Home prices have been on a gradual rise during that time and interest rates are very near historic lows, in spite of the Fed announcement cancelling the QEIII program on theseller paid closing costs 29th of this month. First time home buyers have been reluctant to enter the home buying market and who can blame some of them?

Millennials today watched the housing market boom and crash to the ground and may not be all that excited about being a part of that.

As a seller, there are some things you can do to encourage buyers to go ahead and take the leap by helping out with closing costs. You can’t provide any down payment funds to a buyer, those must be from the buyer’s own funds, but you can make a dent in the total amount needed to close by paying for closing costs. How does it work?

Different mortgage programs have different seller contribution limits based upon how much down payment there will be from the buyer. For example, VA mortgages with zero down and FHA loans with 3.5 percent down allow no more than 4.00 percent of the sales price as a seller contribution to closing costs. That’s actually quite a lot. With a $200,000 price, that can be up to $8,000, plenty to cover most if not all closing charges incurred by a buyer.

With conventional loans, the limits are based upon the down payment. For down payments less than 10 percent of the sales price, the seller is limited to 3.00 percent toward closing cost, 10 to 25 percent down the amount jumps to 6.00 percent of the sales price and a down payment greater than 25 percent, up to 9.00 percent may be contributed. However, there can be appraisal issues when seller contributions approach 5.00 percent.

If your properties are perfect for first timers who may be struggling for cash to close, you can help close the deal paying for closing costs. Something to consider in today’s market.