By W. Todd Galde
Real Estate Commissions for Down Payment or Credits?
Are you a Real Estate professional looking to buy a home?
Did You Know that for Conventional transactions, Real Estate Commissions may be used towards the down payment or closing costs?
Please read below for details on how each situation is treated.
Real Estate Commissions for Down Payment:
If the borrower is a real estate professional and is receiving commission income from the subject property transaction, the borrower may utilize the commission for any down payment and for any required funds to close. Note that commission funds cannot be used to meet any necessary reserve requirements.
If commission earnings from the borrower are used for down payment, the following items are mandatory:
Real Estate Commissions for Closing Costs:
When the commission is applied towards borrower closing costs the amount of the contribution would be subject to Interested Party Contribution (IPC) limitations as a percentage of the sales price, as follows:
Note: Any amount paid to the buyer in excess of the above percent or the actual closing costs and pre-paids will be considered a sales concession. The excess amount is considered a sales concession and will be deducted from the sale price and LTV/CLTV/HCLTV will be recalculated.
Advising. Smart. Financing.