Please tell me Cash Back at closing LEGAL OR ILLEGAL

[Luis NA]

I read all over the internet and as of today I can not get an answer for this. There should be a law somewhere that must answer my question but can not find any. I will ask here: If someone is selling me a home for $100k and I ask for a $20k cash back to do whatever I want, from repair or any improvements and it is FULLY DISCLOSE on the closing sheet why some people argue that this is illegal  or fraud.  Notice we are not inflating the price, we are not asking the seller to increase its value, ALL WE ARE ASKING IS  FOR REPAIR ALLOWANCES and EVERYTHING WILL BE DISCLOSED TO THE LENDER and ALL PARTIES so please someone tell me why it may not be legal? I asked a real state lawyer and he stated to me that as long as it is disclose on the closing statement and all parties agree I can ask for repairs allowance and there is not a minimum or maximum.  I need to hear from you guys what you think..

[Sergey A. Petrov]

There is a question of legality and a question of lending guidelines. Lenders have a qualification restriction on how much of a “rebate” one can receive from a seller and what that “rebate” can be used for. This varies from lending product to lending product.