Can lender credits cover FHA closing costs?
Yes. Accepting a slightly higher rate buys a lender credit that offsets closing costs. The tradeoff is a higher monthly payment for the life of the loan.
What this actually means.
Lender credits and seller credits stack — but the total credit cannot exceed the actual closing costs and prepaids. Anything above is a 'no cost to be paid by the borrower' situation, not a refund.
Where this can move.
Gift source and donor eligibility, seller credit limits, down payment assistance program rules, and source-of-funds documentation can change the answer.
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Educational only. FHA guidelines, lender overlays, rates, fees, and underwriting requirements can change. Final eligibility depends on full underwriting review. Mortgage Expert, Inc. is not affiliated with HUD, FHA, or any government agency.