Updated November 4, 2026
On a Kentucky FHA loan, the seller and other interested parties can contribute up to 6% of the sales price toward your closing costs, prepaid items and discount points. They can’t pay your 3.5% down payment. On a $200,000 home, that’s up to $12,000.
What 6% Looks Like
| Sales price | Maximum at 6% | Your 3.5% minimum down payment |
|---|---|---|
| $150,000 | $9,000 | $5,250 |
| $200,000 | $12,000 | $7,000 |
| $250,000 | $15,000 | $8,750 |
| $300,000 | $18,000 | $10,500 |
The 6% is a ceiling, not an amount you automatically get. The seller can only pay costs you actually have, and most buyers’ costs come in under the limit.
What the Seller Can Pay
- Origination fees and other lender charges
- Appraisal and credit report fees
- Title and closing charges
- Prepaid items, such as homeowner’s insurance and the tax and insurance escrow deposit
- Discount points
- Permanent or temporary interest rate buydowns
- The 1.75% upfront mortgage insurance premium
Buydowns, mortgage interest payments and the upfront premium all count toward the 6%.
What the Seller Can’t Pay
- Your minimum down payment. Your 3.5% has to come from an acceptable source, such as your savings, gift funds or approved down payment assistance.
- More than your actual costs. Contributions above your actual origination fees, closing costs, prepaids and points are treated as an inducement to purchase.
- More than 6%. This is also treated as an inducement.
An inducement reduces the purchase price dollar for dollar when your maximum loan is calculated, so going over can mean bringing more money to closing.
What Doesn’t Count Toward the 6%
- Real estate commissions the seller typically pays under local custom or law.
- Premium pricing credits from a lender or loan originator, as long as that party isn’t also the seller, real estate agent, builder or developer.
How to Ask for Seller Help on a Kentucky Home
- Get your numbers first. Ask for an estimate of your closing costs and prepaids so you request a real figure, not a guess.
- Put it in the contract. FHA requires contributions to be documented. A verbal promise won’t help you at closing.
- Write it as a dollar amount or a percentage “up to” your actual costs, so unused money doesn’t create a problem.
- Watch the appraisal if you raise the price. Some buyers offer more in exchange for seller help. That only works if the home appraises for the higher price.
- Read your Loan Estimate and Closing Disclosure. They list the costs and the seller credit, so you can compare them with your contract.
A Kentucky Example
Say you buy a $250,000 home in Louisville with 3.5% down and your closing costs and prepaids come to $9,000. Your down payment is $8,750. If the seller agrees to pay all $9,000, which is under the $15,000 limit, you’d bring about $8,750 to closing. These numbers are only an illustration. Your actual costs depend on your lender, rate, county, insurance and closing date.
Frequently Asked Questions
Can an FHA seller pay all of my closing costs?
Yes, if they agree and the amount stays within your actual costs and the 6% limit.
Can I use seller money for my down payment?
No. For help with the down payment, look at gift funds or KHC down payment assistance of up to $12,500.
Can the agent or builder contribute too?
Yes, but sellers, real estate agents, builders and developers are all interested parties. Their contributions are added together and count toward the same 6% limit.
Source: HUD Handbook 4000.1, Interested Party Contributions and Inducements to Purchase sections. See the full Kentucky FHA loan requirements.
Want to Know What to Ask the Seller For?
Call or text Joel Lobb at 502-905-3708, email kentuckyloan@gmail.com, or send me your question here.
Joel Lobb — Mortgage Loan Officer
NMLS #57916 | EVO Mortgage, Company NMLS #1738461
Equal Housing Lender. This information is for educational purposes only and is not a commitment to lend. All loans subject to credit approval, underwriting, property approval, and program guidelines, which can change without notice. Not affiliated with or endorsed by FHA, HUD, or any government agency.
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