Should commission refund be shown on Purchase and Sale Agreement? Is that legal?

Question

The Purchase and Sale Agreement I signed shows that "Broker Agrees to pay $8000 at closing towards purchase price of said property (POC)", is it legal? Most mortgage agents told me this money can only be used toward closing cost which is only $3000, then the rest of the money I actually can not get it. Only the mortgage broker I originally planed to work with told me this $8000 will be paid towards my down payment and it is non-taxable on me. Could you please tell me who is telling me the right thing?

Thank you very much.

Answer 1

Its legal but I think the mortgage agent is probably right.  The problem isn't that is it illegal but rather that most banks simply won't let you apply this money to the down payment, only closing costs.  So, its not illegal, just hard (maybe very hard - not sure) to find a bank willing to let you do this.