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Seller Concession Guide

Seller concessions can help buyers reduce cash needed at closing — but the amount a seller can contribute depends on the loan type, down payment, and property type. Here is what buyers and Realtors need to know before writing the offer.

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Quick Answer

Seller concessions can usually help pay for allowable buyer costs such as closing costs, prepaid taxes and insurance, discount points, and certain financing costs. The maximum seller credit depends on the loan program:

2026 Seller Concession Limits at a Glance
  • Conventional primary residence or second home: 3%, 6%, or 9% depending on down payment
  • Conventional / conforming investment property: generally capped at 2%
  • FHA primary residence: generally capped at 6%
  • VA primary residence: unlimited normal buyer closing costs, plus a separate 4% cap on true VA concessions
  • USDA primary residence: generally capped at 6%

Best practice: review seller credits before the offer is written so the contract does not include a credit the buyer cannot fully use.

2026 Seller Concession Limits by Loan Type

Seller credits generally cannot exceed the buyer’s actual allowable costs. If the credit is too high, the unused portion may need to be reduced, reallocated, or handled through a contract revision.

Loan Type Property Type Down Payment / LTV Max Seller Contribution
Conventional Primary Residence / Second Home Less than 10% down (LTV > 90%) 3%
Conventional Primary Residence / Second Home 10% to less than 25% down (LTV 75.01%–90%) 6%
Conventional Primary Residence / Second Home 25% or more down (LTV ≤ 75%) 9%
Conventional Investment Property All LTV / CLTV levels 2%
FHA Primary Residence Any allowed FHA down payment 6%
VA Primary Residence Any allowed VA down payment Unlimited normal closing costs + separate 4% VA concession cap
USDA Primary Residence 0% down / USDA eligible 6%

What Are Seller Concessions?

Seller concessions are costs the seller agrees to pay on behalf of the buyer as part of the purchase contract. They are commonly used to help cover:

  • Closing costs
  • Prepaid taxes and insurance
  • Discount points
  • Temporary or permanent rate buydowns
  • Other allowable financing costs
Important limitation: Seller credits generally cannot be used toward the buyer’s required down payment, minimum borrower contribution, or reserve requirements. That is why the structure of the loan and the wording of the contract matter.

Why Seller Credits Matter

For Homebuyers

Seller credits may reduce the amount of money needed at closing. That can help preserve cash for moving expenses, repairs, furniture, emergency savings, or post-closing reserves.

In some cases, a seller credit may also help the buyer use discount points or a rate buydown to create a more comfortable monthly payment.

For Realtors

Seller credits can be a useful negotiating tool when a buyer has strong income but limited cash to close, when a property has been sitting on the market, or when the seller prefers offering a credit instead of reducing the purchase price.

The key is making sure the credit is allowed, useful, and written correctly before the offer is submitted.

Seller Concession Rules by Loan Type

Conventional
3 / 6 / 9% Based on down payment

Primary Residence & Second Home

Seller concession limits are based on the buyer’s down payment and loan-to-value ratio. Second homes generally follow the same limits as primary residences.

  • Less than 10% down → 3% limit
  • 10% to less than 25% down → 6% limit
  • 25% or more down → 9% limit
Conventional
2% All LTV levels

Investment Property

For conventional and conforming investment property loans, seller concessions are generally capped at 2% of the purchase price — regardless of how much the buyer puts down.

A second home is not treated the same as an investment property. Correctly identifying the occupancy type before writing the contract is essential.

FHA
6% Primary residence

FHA Loans

For FHA loans, seller concessions are generally capped at 6% of the purchase price. FHA seller credits may typically be used toward allowable costs such as origination fees, closing costs, prepaid items, and discount points.

FHA seller credits generally cannot be used to satisfy the borrower’s required minimum investment or down payment.

VA
Unlimited + 4% Two separate rules

VA Loans

VA seller concession rules are often misunderstood. The seller may pay unlimited normal buyer closing costs — those do not count toward the VA concession cap.

Separately, true VA seller concessions (funding fee, prepaid taxes, paying off borrower debts, etc.) are generally capped at 4% of the home’s reasonable value.

USDA
6% Primary residence / 0% down

USDA Loans

For USDA loans, seller and interested-party contributions are generally capped at 6% of the sales price. USDA seller credits must generally be used for an eligible loan purpose and cannot exceed allowable costs or create improper cash back to the buyer. Because USDA guidelines can be specific, seller credits should be reviewed before the contract is written.

Common Seller Credit Mistakes to Avoid

  1. Asking for More Credit Than the Buyer Can Use Seller credits usually cannot exceed the buyer’s actual allowable costs. If the buyer receives more credit than they can use, the excess may need to be reduced, reallocated, or handled through a contract change.
  2. Assuming Seller Credits Can Be Used for Down Payment In many loan programs, seller credits cannot be used to meet the buyer’s minimum required down payment. This is one of the most common misunderstandings among buyers.
  3. Treating All Seller-Paid Items the Same Some loan programs distinguish between standard closing costs, financing concessions, sales concessions, and other interested-party contributions. That distinction matters, especially with VA loans.
  4. Waiting Until After the Contract Is Signed The best time to review seller credits is before the offer is written. This helps prevent contract revisions, underwriting issues, and closing delays.

How to Use Seller Credits Strategically

For Homebuyers: Should You Ask for Seller Credits?

Seller credits may be worth considering if you want to reduce cash needed at closing, preserve savings, or explore whether a rate buydown could improve your monthly payment. Seller credits may help you:

  • Pay closing costs
  • Cover prepaid taxes and insurance
  • Buy down the interest rate
  • Create a more comfortable monthly payment
  • Keep more money in savings after closing

Sometimes a seller credit is more valuable than a lower purchase price. Other times, a price reduction may be better. The right answer depends on your loan type, interest rate, cash to close, tax and insurance costs, and long-term plan.

For Realtors: Review Seller Credits Before Writing the Offer

Seller credits can be a great negotiating tool, but they need to be structured correctly. Before submitting an offer with seller concessions, review:

  • The buyer’s loan type
  • The buyer’s down payment percentage
  • Whether the property is a primary residence, second home, or investment property
  • The estimated closing costs and prepaid items
  • Whether the buyer is trying to buy down the interest rate
  • The maximum seller contribution allowed
  • Whether the full credit can actually be used
A seller credit that sounds good in the contract may not work if it exceeds the buyer’s allowable costs or loan program limits. Want a quick second look before your buyer writes an offer? Request a Buyer Scenario Review →

Download the 2026 Seller Concession Cheat Sheet

Use this quick-reference guide before writing an offer with seller credits. Includes conventional, FHA, VA, and USDA seller concession limits, plus practical notes for buyers and Realtors.

Download the Cheat Sheet

Ask Dustin a Seller Concession Question

Seller credits can be powerful, but they need to be structured correctly. If you are buying a home, preparing to write an offer, or helping a buyer evaluate a contract strategy, Dustin can help you understand how seller concessions may apply to your situation. Ask before the contract is finalized — a quick review upfront can help avoid problems later.

Ask Dustin a Question

Seller Concession FAQ

Seller concessions are costs the seller agrees to pay on behalf of the buyer as part of the purchase contract. They are commonly used to help cover closing costs, prepaid items, discount points, or other allowable buyer costs.
In everyday real estate language, seller concessions and seller credits are often used to describe the same concept. However, specific loan programs may define certain seller-paid items differently, so the exact treatment depends on the loan guidelines.
In many cases, no. Seller concessions generally cannot be used to satisfy the buyer’s required minimum down payment or minimum borrower contribution. They are usually used for allowable closing costs, prepaid items, and financing costs.
For conventional primary residence and second home loans, the seller contribution limit is generally 3% with less than 10% down, 6% with 10% to less than 25% down, and 9% with 25% or more down. For conventional and conforming investment properties, seller concessions are generally capped at 2% regardless of LTV or CLTV.
Generally, no. Conventional second homes generally follow the same seller concession limits as conventional primary residences. Investment properties are treated separately and are generally capped at 2%.
For conventional or conforming investment properties, seller concessions are generally capped at 2% of the purchase price, regardless of LTV or CLTV.
For FHA loans, seller concessions are generally capped at 6% of the purchase price. These credits may be used toward allowable closing costs, prepaid items, borrower origination fees, and discount points, but not the borrower’s required minimum investment.
Not exactly. For VA loans, sellers may pay unlimited normal buyer closing costs. Separately, true VA seller concessions are generally capped at 4% of the home’s reasonable value.
For USDA loans, seller and interested-party contributions are generally capped at 6% of the sales price and must be used for eligible loan purposes.
If the seller credit exceeds the buyer’s allowable costs or program limits, the excess credit may need to be reduced, reallocated, or handled through a contract revision. Buyers generally cannot receive unused seller credit as cash back beyond limited permitted amounts.
It depends. Seller credits may be more helpful when the buyer wants to reduce cash needed at closing or buy down the interest rate. A price reduction may be more helpful when the buyer is focused on reducing the loan amount or purchase price. The best option depends on the buyer’s loan structure and goals.
Seller concessions should be reviewed before the offer is written. This helps buyers and Realtors avoid asking for a credit that cannot be used or does not fit within the loan guidelines.
This information is for general educational purposes only and does not constitute a loan approval, loan commitment, legal advice, or agency guideline warranty. Final eligibility is subject to current agency, investor, underwriting, automated underwriting system findings, and lender overlay requirements. Seller concession rules and loan program guidelines may change. Please verify the applicable guideline at the time of contract and underwriting.