Is it legal for realtors and lenders help a buyer pay the 3% down payment on a FHA loan?
The real estate agent and the lender are permitted to help the buyer out in an FHA loan. However, they may only help the buyer out with his or her closing costs. In that regard, the FHA handbook reads:
Seller Contributions. The seller (or other interested third parties such as real estate agents, builders, developers, etc., or a combination of parties) may contribute up to six percent of the property's sales price toward the buyer's actual closing costs, prepaid expenses, discount points, and other financing concessions.
However, the FHA handbook also provides that such contributions may not be counted towards the buyer's minimum required investment.
Similarly, FHA guidelines also provide that the lender may offset a borrower's closing costs through "premium pricing," i.e. pay all or part of a borrower's closing costs from out of the yield spread or servicing premium received by the broker or lender when it sells the loan. Again, however, that money may only be applied to closing costs and may not be used for the downpayment.