Seller Contributions

Depending on the seller’s eagerness to close the transaction, the seller of a property will often become aggressive and offer to pay some or all of the closing costs, origination points and/or pre-paid items (interest, hazard insurance, tax escrows) associated with the purchase on the buyer’s behalf. This common strategy can be very beneficial to the buyer, particularly if the buyer is short on funds to close. It can also be the vehicle that effectively drives the interest rate down and provides the buyer with a more affordable monthly payment.

Note: 

There are limitations on how much the seller is permitted to
contribute, depending on the loan-to-value ratio. The typical seller
contribution is from 3% to 9% of the purchase price, based on the size of the down payment. Seller contributions may sometimes be isolated to non-recurring closing costs and/or origination or discount points only.
The lender will not permit the seller to contribute funds back to the buyer
after the close of the transaction to accommodate repairs to the property.
Items such as roof leakage or new carpet cannot be covered by any
seller contribution clause.