B3-4.1-02, Interested Party Contributions (IPCs) (05/07/2025)

Interested party contributions (IPCs) are contributions made by third parties with a vested interest in the transaction. These funds are used to cover costs that are typically the buyer's responsibility. IPCs may include financing or sales concessions, as described below. Fannie Mae does not permit IPCs to be used to make the borrower's down payment, meet financial reserve requirements, or meet minimum borrower contribution requirements.

Fannie Mae considers the following to be IPCs:

• funds paid directly by an interested party to the borrower;
• funds that flow through a third-party organization, including nonprofit entities, from the interested party to the borrower;
• funds provided to the transaction on the borrower's behalf by an interested party, including a third-party organization or nonprofit agency; and
• funds donated by an interested party to a third party, which then pays some or all of the closing costs for a specific transaction.

Interested parties to a transaction include, but are not limited to:

• the property seller,
• the builder or developer,
• the real estate agent or broker,
• any affiliate of the above, or
• any party that can benefit from the sale of the property at the highest price and influence the sales price or real estate transaction

(For Fannie Mae's purposes, an affiliation exists when there is direct common ownership or control by the lender over the interested party, by the interested party over the lender or by a third party over both.)

Note: A lender or employer is not considered an interested party to a sales transaction unless it is the property seller or is affiliated with the property seller or another interested party to the transaction.

Financing concessions are financial contributions towards the loan transaction from interested parties. Financing concessions are acceptable when they are contributed towards:

• Borrower closing costs, including prepaids; or
• Borrower homeowners' association (HOA) assessments covering any period after the settlement date (limited to no more than 12 months).

The table below provides maximum financing concessions, which are calculated using the lower of the sales price or appraised value (not the loan amount) of the subject transaction. Typical fees and/or closing costs paid by a seller in accordance with local custom, known as common and customary fees or costs, are not subject to Fannie Mae maximum financing concessions.

Financing concessions that exceed the below limits are considered sales concessions and must be deducted from the property's sales price. As a result, the maximum LTV/CLTV ratios must be recalculated using the reduced sales price or appraised value. Additionally, financing concessions must be equal to or less than the sum of the borrower's closing costs. Any amount exceeding the borrower's closing costs must be treated as a sales concession. See Sales Concessions below.

Sales concessions are IPCs that take the form of non-realty items and may be paid prior to, at or after closing of the transaction. They include, but are not limited to:

• contributions such as cash/cash-like gifts;
• rebates, such as those from real estate agents or brokers, which are not credited towards the transaction;
• furniture, automobiles, decorator allowances, moving costs, and other giveaways;
• lender incentives as described in B3-4.1-03, Lender IncentivesB3-4.1-03, Lender Incentives from a lender who is, or is affiliated with, an interested party; and
• financing concessions that exceed the maximum financing concessions.

Sales concessions must be deducted from the property's sales price and the lower of the reduced sales price or appraised value must be used to calculate LTV/CLTV ratios for underwriting and eligibility purposes.

The following are not considered to be IPCs and are not subject to the requirements described in this topic.

• A lender credit derived from premium pricing, even if the lender is an interested party to the transaction;
• Gift funds or gift of equity from a seller who is also an acceptable donor provided that:
  • The donor is not a builder, or another interested party, and has no affiliation with any other interested party to the transaction, and
  • All requirements pertaining to gift funds and gift of equity from an acceptable donor as stated in B3-4.3-04, Personal GiftsB3-4.3-04, Personal Gifts  and B3-4.3-05, Gifts of EquityB3-4.3-05, Gifts of Equity are met;
• A legitimate pro-rated real estate tax credit in places where real estate taxes are paid in arrears; and
• Fees for standby commitments (refer to Interest Rate Buydowns section below).

Mortgages with undisclosed IPCs are not eligible for sale to Fannie Mae. Examples of these types of contributions include, but are not limited to

• moving expenses,
• payment of various fees on the borrower's behalf,
• "silent" second mortgages held by the property seller, and
• other contributions that are given to the borrower outside of closing and are not disclosed on the settlement statement.

If a temporary or permanent interest rate buydown is being offered to the borrower, and the subsidy is funded by an interested party or a lender affiliated with one, the cost of that subsidy must be included in the IPC calculation.

The lender must ensure the subsidy cost meets Fannie Mae's allowable maximum financing concessions. This can be accomplished by confirming the current market interest rate (that is, the rate without the payment of any discount points) and the discount points being charged to obtain the interest rate offered with the buydown.

Note: Standby commitment (also known as forward commitment) agreements between a builder and lender for blanket interest rate coverage that are executed prior to signing a sales contract with a borrower are not subject to Fannie Mae's maximum financing concessions because they are not attributable to the specific loan transaction. Loans with a reduced interest rate due to a standby commitment must be delivered with SFC 887. 

Loans with any type of payment abatement are not eligible for sale to Fannie Mae, even if they are disclosed on the settlement statement. This prohibition applies when an interested party funds the abatement directly and/or through another entity, such as a nonprofit down payment assistance program.

Note: The payment of HOA fees is not considered an abatement unless the payment of the fee extends for more than 12 months. Paying HOA fees for 12 months or less is considered an interested party contribution.

The lender must ensure that all of the following requirements for an IPC are satisfied.