Fannie Mae Interested Party Contributions: 3%, 6%, 9% and 2% Limits
Short answer: Fannie Mae limits interested party contributions (IPCs) to 3% when the LTV or CLTV is above 90%, 6% from 75.01% to 90%, and 9% at 75% or less, for a principal residence or second home. On an investment property the cap is 2% at any LTV. Each percentage is of the lower of the sales price or the appraised value, not the loan amount (Fannie Mae Selling Guide B3-4.1-02, checked October 29, 2026).
The limits
| Occupancy | LTV or CLTV | Maximum IPC |
|---|---|---|
| Principal residence or second home | Above 90% | 3% |
| Principal residence or second home | 75.01% to 90% | 6% |
| Principal residence or second home | 75% or less | 9% |
| Investment property | Any | 2% |
What counts as an interested party contribution
An interested party is anyone with a financial interest in the sale: the seller, the builder or developer, the real estate agent or broker, or an affiliate of any of them. Fannie Mae splits their contributions into two kinds.
- Financing concessions: money towards the loan transaction, such as paying the buyer's closing costs, prepaid items or a temporary buydown. These count against the cap above.
- Sales concessions: non-realty items such as cash or gift cards, furniture, moving costs or rebates not credited to the transaction. These are not allowed within the cap: they are deducted from the sales price.
Financing concessions can pay only closing costs and prepaid items. They cannot fund the down payment, reserves or the borrower's minimum contribution. Any amount above the cap, or above the borrower's actual closing costs, is treated as a sales concession: it comes off the sales price and the LTV and CLTV are recalculated.
Worked examples
Example 1: high LTV
Primary residence, price $400,000, appraised $400,000, 95% LTV.
LTV is above 90%, so the cap is 3%.
3% x $400,000 = **$12,000** the seller may pay towards closing costs.
Example 2: appraisal below price
Primary residence, price $310,000, appraised $300,000, loan $272,800.
Use the lower figure: $300,000. LTV = $272,800 / $300,000 = 90.9%, which is above 90%.
Cap = 3% x $300,000 = **$9,000**. Measuring on the $310,000 price gives 88% LTV and a 6% cap, which is the trap answer.
Example 3: investment property
Investment property, price $300,000, 75% LTV.
Investment properties are capped at 2% whatever the LTV.
2% x $300,000 = **$6,000**. The 9% tier applies only to principal residences and second homes.
How FHA compares
FHA allows interested parties to contribute up to 6% of the sales price towards origination fees, other closing costs, prepaid items and the upfront mortgage insurance premium, at any LTV (HUD Handbook 4000.1, checked October 29, 2026). Amounts above that are an inducement to purchase and reduce the price used to size the loan. On the test, read which program the question names before you pick a percentage.
Where this shows up on the SAFE MLO Test
Interested party contributions sit under general mortgage knowledge (qualified and non-qualified programs, 20% of the test) and the financial calculations in origination activities (27%), per the NMLS Content Outline. Expect a calculation: find the occupancy, work out the LTV on the lower of price or value, pick the tier, then multiply.
Practise the calculation with the mortgage math guide, check how seller credits interact with the Loan Estimate in TRID tolerance buckets, and see the full test layout in the SAFE MLO Test guide. Then try the free 20-question practice test.
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Frequently asked questions
What are Fannie Mae's interested party contribution limits?
For a principal residence or second home: 3% above 90% LTV/CLTV, 6% from 75.01% to 90%, 9% at 75% or less. Investment property: 2% at any LTV (Selling Guide B3-4.1-02).
Is the IPC limit based on the sales price or the loan amount?
Neither alone: it is a percentage of the lower of the sales price or the appraised value, not the loan amount.
What happens if the seller pays more than the limit?
The excess is treated as a sales concession, deducted from the sales price, and the LTV and CLTV are recalculated.
Can interested party contributions pay the down payment?
No. They can pay closing costs and prepaid items only, not the down payment, reserves or the borrower's minimum contribution.
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