"We'll pay your closing costs." "We'll buy your rate down." New-home sales offices run on incentives, and on FHA and USDA loans those incentives have hard limits. Knowing the limit tells you whether an offer can actually be used the way the sales office describes it.
HUD counts builders and developers as Interested Parties, alongside sellers, real estate agents and lenders. Together they may contribute up to 6 percent of the sales price toward your origination fees, other closing costs, prepaid items and discount points. The 6 percent also has to cover:
Permanent and temporary interest rate buydowns and other payment supplements.
Payments of mortgage interest on fixed rate loans.
If the builder pays your upfront mortgage insurance premium, that counts too.
None of it can go toward your 3.5 percent Minimum Required Investment. That money has to come from you or another acceptable source.
FHA calls some builder payments inducements to purchase, and each dollar of them is subtracted from the price before the loan-to-value is applied. That includes contributions over 6 percent, contributions larger than your actual closing costs and prepaids, decorating allowances, repair allowances, moving costs, paying off your consumer debt, and personal property.
A "$10,000 design center credit" on a new FHA home is exactly the kind of thing to ask about. Appliances like a range, refrigerator, dishwasher, washer, dryer, carpeting and window treatments are not treated as inducements when they are customary for the area and no cash is handed over.
A lender credit from pricing is excluded from the 6 percent, but only when the lender is not also the seller, agent, builder or developer. That is why it matters which company is giving you the credit.
USDA's regulation will not guarantee a purchase where the seller or another interested party contributes more than 6 percent of the sales price toward financing costs, closing costs, escrow accounts, furniture or other giveaways, unless the agency provides otherwise.
Before you accept any incentive, get it itemized and compare it with an outside quote on the same home. What FHA inspects on a home still being built is on build stage and inspections.
Where this comes from: HUD Handbook 4000.1, Update 17 issued November 26, 2025, section II.A.4, Interested Party Contributions and Inducements to Purchase (TOTAL); 7 CFR 3555.102(h) Seller concessions, eCFR current as of September 24, 2026. Program rules change, and a lender may set stricter limits. Not a commitment to lend.
Send it over. We'll price the same loan independently and show you the two offers side by side - total cost, incentive counted, in writing. Then the decision is yours, made with real numbers.