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Can we roll closing costs into the loan on a purchase?

This is one of the most common misconceptions in the mortgage industry. You may have heard a friend or family member mention they were able to roll their closing costs into their mortgage loan; however this is not entirely true.

What this really means is that they were able to secure either a seller credit, which is when the seller agrees to pay the costs because they sold the house at more than the market value, or lender credit, which is when a lender will pay the closing costs in exchange for a higher interest rate. See below:

  • Fannie Mae (Conventional): The only way to not pay your closing costs out of pocket would be to include a seller credit as a contingency of your offer or speak to your loan officer about a lender credit.
  • Freddie Mac (Conventional): The only way to not pay your closing costs out of pocket would be to include a seller credit as a contingency of your offer or speak to your loan officer about a lender credit.
  • FHA: The only way to not pay your closing costs out of pocket would be to include a seller credit as a contingency of your offer or speak to your loan officer about a lender credit.
  • USDA: You can roll the closing costs into your loan only if the house appraises above the purchase price.
  • VA: The only way to not pay your closing costs out of pocket would be to include a seller credit as a contingency of your offer or speak to your loan officer about a lender credit.

 

Have more questions? Download our eBook of the most popular mortgage FAQs
for more helpful information!

 

To learn more about specific mortgage requirements, be sure to speak with an experience mortgage broker.

Blue Water Mortgage is licensed in New HampshireMaineMassachusettsConnecticutFlorida, and North Carolina.

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