My Contract reads (which is the standard contract used in the state of Texas)
Under Item 12 "Settlement and Other Expenses" it reads:
Seller shall also pay an amount not to exceed X to be applied in following order: Buyer's expenses which Buyer is prohibited from paying by FHA, VA, Texas Veterans Land Board or other governmental loan programs, and then to other Buyer's Expenses as allowed by the Lender.
You have to put a required amount down, not a percentage...I learned this from my Realtor. We took the amount on my GFE and wrote that into the contract.
That is a negotiation line in the contract and yes it is standard, but the "x" is variable and is negotiated. In some states there are a few things that have to be paid by the seller, but outside of those, this clause is just where the breakdown of any negotiated compensation from the seller (i.e closing costs, etc) gets inputed. It does not mean that either the seller or buyer is always responsible for the closing costs. It specifically is allowing that whatever concession are agreed upon, they will first be applied to any closing costs not allowed to be paid by the buyer and then to any agreed upon closing costs or items that are being paid by the seller and have been ok'd by the lender.
And also, your realtor is wrong. FHA has a minimum percentage down. Unless you are doing some of the rare HUD program where you buy a house for $100 out of pocket deals, it is a minimum percentage of the sales price (used to be 3% and now is 3.5%) Now once you make on offer and such, the loan documents do not specify a percentage, but the agreed upon amount that you have to pay, but that amount will always be equal to or greater than the minimum percentage.
hope this info will be useful for you too.
