Answer

The seller (or other interested third parties such as real estate agents, builders, developers, etc., or a combination of parties) may contribute up to six percent of the property's sales price toward the buyer's actual closing costs, prepaid expenses, discount points, and other financing concessions.
Contributions exceeding six percent of the sales price or exceeding the actual cost of prepaid expenses, discounts points, and other financing concessions will be treated as inducements to purchase, and result in a dollar-for-dollar reduction to the lesser of the sales price or appraised value of the property before applying the appropriate LTV ratio.
Closing costs normally paid by the borrower are considered contributions if paid by the seller.
The six percent limitation also includes seller payment for permanent and temporary interest rate buydowns and other payment supplements such as payments of mortgage interest for fixed rate mortgages and GPMs only (but not principal), mortgage payment protection insurance, and payment of UFMIP.
Fees typically paid by the seller under local or state law, or local custom, such as real estate commissions, charges for pest inspections, fees paid for trustees to release a deed of trust, etc., are not considered contributions.
Each dollar exceeding FHA's six percent limit must be subtracted from the property's sales price before applying the LTV ratio.
Contributions are listed on the Loan Underwriting and Transmittal Summary (form HUD 92900-LT)