Real Estate Math
A Michigan buyer offers $10,000 over asking price ($310,000) on a property that appraises at $305,000 with an FHA loan. The minimum the buyer would pay at closing (beyond the down payment) to cover the difference is:
A$5,000
B$10,000
C$15,000✓ Correct
D$0, FHA covers the gap
Explanation
FHA will lend up to the appraised value ($305,000). If the buyer offers $320,000 and the home appraises at $305,000, the buyer must cover the $15,000 gap between the offer price and appraised value from their own funds. The minimum gap covered = $320,000 - $305,000 = $15,000. Answer A ($5,000) would be if offer was $310,000 vs $305,000 appraisal.
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