Over asking to cover closing cost FHA loan

[Danielle Duffy]

thoughts?

Quick question: I have the funds to cover the 3.5% FHA required down payment.
I would like to put in an offer on a home asking is 172,600.
Offer 180,000.
Seller pays up to 7,400 Closing cost (bank fees, etc + prepaid)

Understand that home will need to appraiser for 180k.
Will the bank and/or title company understand the contract as such?
Meaning, do I need to inform the bank of the transaction/settlement or kickback toward closing of 7,400?
Also what happens to any overage of the 7,400? Seller keeps it?
Is this something that is done??

Thank you for any advice in advance.

[Jon Holdman]

Asking for closing costs is common. $7400 seem like a LOT for a $180K offer. 3%, or $5400, would be more typical.

You just put "seller to pay buyer's closing costs up to $7,400" in the offer. Your agent can help with the exact place this goes. This is very common and everyone involved should understand.

If it appraises for less than $180K, the loan and down payment will be based on the lower amount. You would need to come out of pocket for the excess, or else get the sellers to accept a lower value.

Once you have a contract with an agreed upon amount for closing costs, it becomes the upper limit. If the actual costs are less, you will only get a credit for that amount. At least, that's how it was done on a house I sold about two years ago. Yes, I absolutely kept it.