Can the Seller Pay Your Closing Costs in Texas?

You might not need as much cash to buy a home as you think.

One of the things I hear pretty regularly from homebuyers is that they've managed to save enough for a down payment, but they're worried about all the OTHER expenses that come with buying a house.

And I get it.

You've got your down payment, moving expenses, inspections, homeowners insurance, and then there's this lovely little thing called *closing costs.

It adds up pretty quickly!

But here's something a lot of buyers don't realize.

Sometimes, we can negotiate for the SELLER to pay some or even all of your closing costs.

Yep. The seller.

Let's talk about how that works.

First, What Exactly Are Closing Costs?

Closing costs are the expenses associated with getting your mortgage and completing the purchase of your home.

They can include things like:

- Appraisal fees
- Title insurance and title company fees
- Lender and underwriting fees
- Prepaid property taxes
- Homeowners insurance
- Recording fees

Depending on the loan and property, closing costs and prepaid expenses can add up to several thousand dollars.

And here's where people sometimes get confused.

Your down payment and your closing costs are two different things.

You might qualify for a mortgage with 3% or 3.5% down, but that doesn't necessarily mean that's all the money you'll need to close.

So How Do You Get the Seller to Pay?

In the mortgage world, we call these seller concessions or seller contributions.

Basically, when you're making an offer on a house, you can ask the seller to contribute a certain amount toward your closing costs.

For example:

Let's say you're buying a home in Longview, Texas, for $250,000.

Your estimated closing costs and prepaid expenses come to $8,000.

Instead of paying all $8,000 yourself, your Realtor might negotiate for the seller to contribute that amount as part of the purchase agreement.

If the seller agrees, and the contribution is permitted by your loan program, that could save you $8,000 in upfront expenses.

Pretty nice, right?

Now, that doesn't mean the seller is required to do this. It's a negotiation, and whether it makes sense depends on the particular transaction.

But it's absolutely something worth exploring.

Do FHA, VA, USDA, and Conventional Loans Allow Seller Contributions?

Yes! All four loan programs allow certain seller-paid closing costs, although the rules and limits are different.

**FHA loans:** Generally allow seller contributions of up to 6% of the sales price toward eligible closing costs and other permitted expenses.

**Conventional loans:** Seller contribution limits generally range from 3% to 9%, depending on factors like your down payment and whether the property is a primary residence, second home, or investment property.

**USDA loans:** Generally allow eligible seller contributions of up to 6% of the sales price toward permitted costs.

**VA loans:** VA has special rules. Certain ordinary closing costs can be paid by the seller without counting toward VA's separate 4% seller-concession limit. That distinction can make a big difference!

And remember, these are maximum allowances, not amounts you're automatically entitled to receive. The seller must agree, and the actual credit is limited by the program rules and eligible costs.

This is one of the reasons I believe it's so important to have a mortgage professional who understands the different programs.

The details matter.

Could You Buy a House With Very Little Money Out of Pocket?

Potentially, yes.

Let's say you're purchasing a home in Henderson or Kilgore that qualifies for USDA financing.

USDA offers 100% financing to eligible buyers purchasing eligible properties.

That means no required down payment.

Now imagine that the seller also agrees to cover your eligible closing costs.

You can see how this could make buying a home much more affordable upfront!

Does that mean every buyer can get into a home without spending a dime?

Of course not.

You may still have expenses such as earnest money, inspections, or other costs that need to be paid before closing. Eligibility, appraisal results, and the details of your contract also matter.

But the point is, don't automatically assume you need $15,000 or $20,000 sitting in your bank account before you can even consider buying a home.

You might have more options than you realize.

Here's Something Else Worth Knowing

Sometimes buyers focus so much on negotiating the lowest possible purchase price that they overlook another option.

What if getting some help with closing costs would benefit you more than a small reduction in the sales price?

For some buyers, keeping several thousand dollars in savings is more valuable than slightly reducing their mortgage payment.

Of course, we have to look at the numbers, the appraisal, and what makes financial sense.

But that's exactly why I like to look at the whole picture instead of just focusing on the interest rate or the purchase price.

Before You Make an Offer, Let's Talk

If you're thinking about buying a home in Henderson, Longview, Tyler, Kilgore, or anywhere else in East Texas, I'd encourage you to have a conversation with a mortgage professional BEFORE you start making offers.

Not every loan program works the same way.

And sometimes a little planning on the front end can make a pretty significant difference in how much money you need at closing.

I can help you compare your financing options, estimate your expenses, and work with your Realtor to understand what seller contributions might be possible.

You don't have to figure all of this out yourself.

And you certainly don't have to know all the mortgage rules. That's my job. 😊

Have questions about how much money you'd actually need to buy a home?

I'm Shana Williams, your East Texas mortgage advisor, and I believe the mortgage process should make sense.

Making mortgages make sense.

Shana Williams | NMLS #1229825
Powered by Edge Home Finance, LLC | NMLS #891464
Equal Housing Opportunity

*All financing is subject to borrower and property eligibility, underwriting approval, and applicable loan program guidelines. Seller contributions are subject to program limits and transaction requirements.