Short answerA seller concession is money the seller pays toward the buyer's closing costs or prepaid items, usually as a credit at closing. Loan programs cap it: conventional loans allow 3%, 6%, or 9% depending on down payment, FHA and USDA allow up to 6%, and VA allows 4% plus normal closing costs.
Limits by loan type
| Loan | Concession limit |
|---|---|
| Conventional, less than 10% down | 3% of price |
| Conventional, 10% to 25% down | 6% |
| Conventional, more than 25% down | 9% |
| Conventional, investment property | 2% |
| FHA | 6% |
| USDA | 6% |
| VA | 4% of value, plus normal closing costs |
For sellers
A concession lowers your net the same as a price cut. On a $215,000 sale, a 3% concession is $6,450. Compare offers on net. A concession can also be a cheaper way than repairs to settle inspection items; see repairs, credit, or a lower price.
For buyers
A concession reduces the cash you need at closing, but it cannot pay your down payment. Your lender confirms the limit for your loan.
Frequently asked questions
Does a seller concession raise the price?
Sometimes buyers offer more to cover it. The appraisal still has to support the price.
Can a concession pay my down payment?
No. Loan programs do not allow it to cover the down payment.
Keep reading
Want to know what a buyer's inspector may find before they do?
Book a free pre listing condition walk. I walk the house with you, point out what inspectors and FHA, VA, and USDA appraisers tend to flag, and give you planning ranges so you can decide what to fix, credit, price in, or disclose.
Book a condition walkOr call or text (812) 525-5489, or email john@yourpropertynegotiator.com.
The condition walk is a REALTOR® and contractor evaluation, not a home inspection, and it does not replace one. If you have already signed a listing agreement with another agent, please take these questions to your agent.
Looking at a house and not sure what you are getting into?
Ask for a free Before You Offer review. Send me the listing. I look over the photos, the seller's disclosure, and recent sales, then flag likely condition issues and planning cost ranges before you write an offer.
Request a Before You Offer reviewOr call or text (812) 525-5489, or email john@yourpropertynegotiator.com.
The Before You Offer review is a REALTOR® and contractor review of the listing, not a home inspection. It is for buyers who are not already working with an agent. If you have an agent, please bring these questions to your agent.
Sources
- Fannie Mae Selling Guide B3-4.1-02, interested party contributions
- Mortgage Research Network, interested party contribution limits
Written by John Long, REALTOR®, 1 Percent Lists Indiana Real Estate. Working contractor who has priced hundreds of home inspection repair requests. Former labor relations negotiator for a major manufacturer and U.S. Coast Guard veteran.
John Long, REALTOR® · 1 Percent Lists Indiana Real Estate · (812) 525-5489 · yourpropertynegotiator.com
This page is general information, not a substitute for a professional home inspection, and not legal, tax, insurance, or lending advice. Ask a real estate attorney about contracts and disclosure, a CPA about taxes, your lender about loan rules, and a licensed inspector or tradesperson about your house. Nothing here guarantees a sale price, net proceeds, repair cost, payment, timeline, appraisal, inspection result, or loan approval. Cost figures are planning estimates, not bids. I own Wardmark Property Operations LLC, a contracting company. You are always free to use any contractor you choose.