FHA Closing Costs

Posted on January 2, 2009
Filed Under FHA Home Loans, Home Loans | 1 Comment

FHA has what are called: Allowable Closing Costs and Non-Allowable Closing Costs.

In the past before January 27th, 2006 there was a big difference as to which closing costs a borrower could not pay. But, that has changed to make the program more in line with conventional mortgages.

Most fees that a borrower would see on a Good Faith Estimate can now be charged to the borrower accept for the Tax Service Fee which is still considered a non-allowable closing cost. Therefore it would be typical for a borrower to pay for title insurance, escrow fees, processing fee, 1% loan origination, recording fee, notary, underwriting, doc prep, courier fees, pre-paid insurance and taxes and perhaps other misc. fees standard to the local area of the property.

Keep in mind that the seller is allowed to credit up to 6% of the purchase price towards closing costs which can certainly reduce the amount of funds the borrower would need to bring to closing.