Definition
Financial assistance provided to buyers to help cover closing costs, typically ranging 2-5% of purchase price. This assistance reduces your out-of-pocket expenses at closing.
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Closing cost assistance comes from lenders, government programs, employers, and non-profits. This assistance may cover all closing costs or only specific items like points, inspection, and appraisal fees. Some programs provide grants while others offer reduced interest rates in exchange for accepting higher points.
Pro Tip
Closing cost assistance is often available but rarely advertised. Specifically ask lenders if they offer these programs.
Example
The buyer received a closing cost credit of $8,000 from a first-time buyer program, which covered the appraisal, inspection, and title insurance.