Seller Can Pay Buyer’s Closing Costs With a Washington FHA Loan

March 23, 2018
Last updated:
March 8, 2022
In This Article

The Federal Housing Administration (FHA) mortgage loan program has been helping home buyers become homeowners for decades. FHA loans are particularly popular among first-time buyers in Washington because the program allows for a relatively low down payment of 3.5%.

One advantage of using an FHA-backed mortgage loan is the fact that sellers can pay some or all of the buyer’s closing costs. Here’s what you should know about Washington State FHA loans, closing costs, and contributions from “interested parties.”

Seller Can Pay Buyer’s Closing Costs With FHA Loans

In Washington, and nationwide, sellers are allowed to pay a portion of the buyer’s closing costs when an FHA loan is used. We’ll get back to the rules and requirements for these “seller concessions” in a moment. But first, a couple of definitions.


An FHA loan is one that is insured through the Federal Housing Administration, part of HUD. This insurance protects lenders from losses that might result from borrower default. For borrowers, the program offers relatively low down payment and flexible qualification criteria.

Closing costs

When borrowers take out a mortgage loan to buy a house, they encounter a variety of charges. Some of these come from the lender, while others come third parties like home appraisers, government entities, title companies, etc. Collectively, these fees and charges are referred to as closing costs. Most mortgages come with closing costs, and that applies to FHA loans as well.

The FHA loan program allows for Washington home buyers to have some of their closing costs paid by the person(s) selling the home. This often referred to as a seller “concession” or contribution.

View WA State Mortgage Rates

According to HUD Handbook 4000.1, home buyers in Washington who use an FHA loan to buy a house can receive seller concessions toward their closing costs. The person selling the home is allowed to pay up to 6% of the sales price amount toward the buyer’s closing costs.

As the handbook states:

“Standard Interested Parties may contribute up to 6 percent of the sales price toward the Borrower’s origination fees, other closing costs and discount points.”

In this context, the term “interested party” refers to sellers, real estate agents, developers, home builders, or other parties with an interest in the transaction. These people can pay some or all of the buyer’s FHA loan closing costs, generally up to 6% of the sale price.

Overcoming Obstacles to Homeownership

Down payments and closing costs are two of the financial hurdles home buyers in Washington must overcome on their path to homeownership. (At least, for those buyers who use mortgage loans to finance their purchases.) But there are ways to overcome these perceived hurdles.

Home buyers in Washington State who use FHA or conventional loans can often obtain gift money from family and friends, to help cover the down-payment expense. We’ve written about this in the past. And then there are the seller concessions toward closing costs, which are discussed above.

Exploring All of Your Mortgage Options

The point is, the path to ownership is not always as steep as home buyers believe it to be. There’s a lot of flexibility within today’s mortgage industry. There are many different loan programs, and they all have unique features and benefits. That’s why it’s so important to speak with a knowledgeable loan officer about your financing options.

What’s the best loan option for you? What might you do to reduce your upfront expense when buying and financing a home? These are just two of the important questions we can help you answer.

Get an Instant Mortgage Rate Quote Today

Need a Home Mortgage Loan?

Will you need mortgage financing to buy a home in Washington State? We can help. Sammamish Mortgage has been serving buyers across the Pacific Northwest since 1992. We currently lend in all of Washington, Oregon, Idaho, and Colorado. Sammamish Mortgage offers a wide variety of mortgage programs & products with flexible qualification criteria. Please contact us today with any financing-related questions you have.

Other Blogs You May Like
VA Jumbo Loans in Washington State: No More Limits
February 14, 2024
4 min read
VA Jumbo Loans in Washington State: No More Limits
Veterans who qualify for a VA loan do not have to worry about going over a certain loan amount...
FHA Loans: A Popular Option for First-Time Buyers in Washington
February 13, 2024
3 min read
FHA Loans: A Popular Option for First-Time Buyers in Washington
FHA loans are popular among first-time home buyers in Washington State because they offer a low...
Show 130 more posts
from this category

Connect with a Mortgage Advisor Today!

Whether you’re buying a home or ready to refinance, our professionals can help.

Compare Mortgage Rates in Your Area Instantly

No Obligation and transparency 24/7. Instantly compare live rates and costs from our network of lenders across the country. Real-time accurate rates and closing costs for a variety of loan programs custom to your specific situation.

Subscribe to our newsletter