Can I get cash back at closing when I buy a home?

Fannie Mae's rule

Fannie Mae's Selling Guide (B2-1.3-01) says purchase loan proceeds can't give the buyer cash back except for:

• a reimbursement of fees and charges you overpaid, shown clearly on the settlement statement and documented; and
• a legitimate prorated real estate tax credit in places where taxes are paid in arrears.

A refund can also be applied to reduce your loan balance. Fannie also says a prorated tax credit from the seller can offset money needed to set up your escrow account when the Closing Disclosure shows it.

FHA's rules

HUD's Handbook 4000.1 lets seller and other interested party credits pay your closing costs, prepaid items and discount points, including items you paid outside closing, such as the appraisal. Those credits can't be used to pay off debts, collections, escrow shortages, missed mortgage payments or judgments. Lender credits from the rate you choose must go toward your principal if they're more than your actual closing costs and prepaid items.

How do I avoid leaving a credit on the table?

• Ask for a seller credit that fits your estimated costs, not more. See seller credits and buydowns.
• Keep receipts for anything you pay up front, like the appraisal or inspection fees the lender charges.
• Review your Loan Estimate and Closing Disclosure with Tom. See how to read a Loan Estimate and lender credits.

How do NH property tax prorations work at closing?

The seller and buyer usually split the year's property taxes based on the closing date, and the result shows as a credit or charge on the Closing Disclosure. How it works depends on your town's billing schedule. See NH tax bills and escrow and NH closing costs.