How Much Can a Seller Contribute to Your Closing Costs? Limits by Loan Type
In a slower market, asking the seller for help can save thousands. But every loan has a cap, and going over can cost you the deal.
When the market slows down, buyers get something they have not had in years: leverage. Homes sit longer, prices soften, and sellers start saying yes to things they would have laughed at before.
One of the best asks is help with your closing costs. Done right, it can drop your cash to close by thousands of dollars. Done wrong, it can break your financing at the last minute, because every loan has a limit on how much a seller can contribute.
Here are those limits, in plain English, along with a calculator and the smart way to ask.
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Find My Seller Credit LimitThe Limits, Loan by Loan
| Loan type | Seller concession limit | Measured against |
|---|---|---|
| Conventional, primary or second home, under 10% down | 3% | Lesser of price or appraised value |
| Conventional, primary or second home, 10% to under 25% down | 6% | Lesser of price or appraised value |
| Conventional, primary or second home, 25% or more down | 9% | Lesser of price or appraised value |
| Conventional investment property | 2% | Lesser of price or appraised value |
| FHA | 6% | Lesser of price or appraised value |
| VA (concessions beyond normal closing costs) | 4% | Appraised value on the VA Notice of Value |
| USDA | 6% | Sale price |
Three rules apply across the board. The seller cannot cover your down payment. The credit cannot exceed your actual closing costs and prepaid items. And on conventional loans, a seller-funded rate buydown counts toward the same limit as closing-cost help. Limits can change and lenders can add their own rules, so confirm before you write the offer.
Seller Concession Calculator
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How to Ask Without Losing the Deal
- Read the market first. Days on market, price reductions and a motivated seller all raise your odds. Your agent can pull them.
- Ask for a credit, not just a lower price. A credit reduces cash to close and keeps the sale price high, which can help the appraisal. A price cut lowers your loan and payment. The better choice depends on your goal.
- Know your number. Ask for your actual closing costs, up to the limit, not a round number that could be over it.
- Use it for the right purpose. A credit can fund closing costs, prepaid items or a temporary rate buydown within the rules. It cannot be used to cover your down payment.
- Put it in writing. The credit has to appear in the contract and on the Closing Disclosure.
Credit or Price Cut? A Quick Way to Decide
If cash to close is your bottleneck, ask for the credit. If your monthly payment is the pressure point, a price reduction helps more, and a seller-funded rate buydown may help most of all. If you are unsure, I can run both versions side by side so you can see the cost over time.
One more reminder: concessions that exceed the limit have to be removed or reduced, which can change your cash to close at the last minute. Running the numbers before the offer avoids that.
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I will show you the most the seller can contribute and how it changes your cash to close and monthly payment.
Schedule My Offer Strategy CallSeller Concessions: Common Questions
What are seller concessions?
They are costs the seller agrees to pay on your behalf, such as part of your closing costs or prepaid items, usually written into the purchase contract as a credit.
How much can a seller pay toward closing costs on an FHA loan?
FHA allows up to 6 percent of the price or appraised value, whichever is lower, from all interested parties combined.
What are the VA seller concession rules?
VA allows the seller to pay the buyer’s normal closing costs without a cap, while other concessions such as the funding fee, prepaid taxes and insurance, or certain buydowns are limited to 4 percent.
Can a seller pay my down payment?
No. Seller credits cannot be used for your down payment, and they cannot exceed your actual closing costs and prepaid items.
Is a seller credit better than a lower price?
It depends. A credit lowers the cash you bring, while a price cut lowers your loan and payment. A credit can also help when an appraisal might come in near the price.
Do seller concessions work on investment properties?
On conventional investment loans the limit is lower, typically 2 percent. DSCR and other non-QM programs set their own rules, so ask before you negotiate.