Posted by River City on September 25, 2006 at 15:51:28:
To do this legally, it must be in writing and disclosed to the lender, otherwise, you will be committing fraud. Mortgage fraud carries heavy penalties and punishments (money and prison) because it eventually involves the federal government. Most lenders send a statement to closing (for all parties to sign) that states all agreements between the parties have been disclosed to the lender. If, at a later time it is discovered this type of an agreement was not disclosed, the lender could prosecute you and the seller and you could receive a visit from the FBI. When sellers give back part of the down payment, it usually means the property is being sold at an inflated value.
You might want to google “mortgage fraud”.
Lenders will allow more than 3% seller concession based on the loan to value.