For a conventional conforming loan, what is the most that the seller can contribute?

In the context of conventional conforming loans, the guidelines established by Fannie Mae and Freddie Mac dictate the limits on how much a seller can contribute towards a buyer's closing costs and other transaction-related expenses. The correct answer reflects that a seller can contribute up to 6% of the purchase price of the home.

This 6% limit is determined to strike a balance between assisting the buyer with closing costs without significantly impacting the lender's risk assessment. Seller contributions can be beneficial for buyers, particularly first-time homebuyers who may need help covering upfront costs. The contributions can include assistance with closing costs, discount points, or prepaid items, making homeownership more accessible without overly inflating the sales price or jeopardizing the loan's integrity.

Understanding this limit is vital for both real estate professionals and prospective buyers to ensure compliance with lending guidelines while making informed decisions in real estate transactions.