What Are Seller Concessions?
Seller Concessions: Money the seller agrees to pay toward the buyer's closing costs, within program limits.
Also called: seller credit, interested party contributions
Seller concessions, or seller credits, are amounts the seller pays toward your closing costs, prepaid items or a rate buydown. They're written into the purchase agreement.
Program limits
| Program | Maximum seller contribution |
|---|---|
| Conventional, under 10% down | 3% of price |
| Conventional, 10%–25% down | 6% |
| Conventional, over 25% down | 9% |
| Conventional investment property | 2% |
| FHA | 6% |
| VA | All normal closing costs, plus up to 4% in concessions |
| USDA | 6% |
Credits can't exceed your actual closing costs and prepaids. They can't be paid to you in cash or count toward the minimum down payment.
Price cut or credit?
A credit lowers your cash to close right away. A price cut lowers the loan and the monthly payment slightly. If cash is tight, credits often help more.
Good to know
Buying without a buyer's agent leaves room in the deal to ask for a larger credit.