What Are Seller Concessions?
Seller concessions are closing costs the home seller agrees to pay on your behalf, written into the purchase contract. Instead of lowering the price, the seller puts money toward the expenses you'd otherwise bring to closing.
You'll also hear the same money called a seller credit. Concession is the word for the negotiation; credit is how the dollars appear on your closing paperwork. Same money, two names.
The Basics
- Seller concessions are closing costs the seller agrees to pay on your behalf
- Limits run from 2 to 9 percent of the price depending on loan type and down payment
- A concession can't exceed your actual costs, so ask for what you'll really owe
- Concessions can cover closing costs and prepaids, never your down payment
Seller Concessions: Explained in Plain English
Concessions get into a deal at two moments. The first is the offer itself: you offer a price and ask the seller to contribute a set dollar amount or percentage toward your costs. The second is after the home inspection, when repair issues often get settled as a credit added to the contract by amendment. Both paths are routine, and the second one surprises buyers who assumed the contract was final the day they signed it. As long as your lender has the signed amendment before your closing paperwork is drawn, an inspection credit clears underwriting the same as one negotiated up front.
Concessions can pay for nearly everything on the cost side of your closing: lender fees, title insurance, appraisal and inspection fees, prepaid property taxes and homeowners insurance, and discount points that permanently lower your rate. On conventional loans they can even cover up to 12 months of homeowners association dues. The full list of eligible costs lives in our guide to closing costs.
The one thing a concession can never do is fund your down payment. Federal loan guidelines draw that line without exception, so a concession reduces the cash you need for costs, never the equity you're required to bring.
You'll see the agreed concession again on page 3 of your Closing Disclosure, in the seller credits section, before you close.
Seller Concession Limits by Loan Type
Lenders cap how much a seller can contribute, and the cap depends on your loan type. The percentages apply to the home's price or its appraised value, whichever is lower.
| Loan Type | Maximum Seller Concession |
|---|---|
| Conventional mortgages | 3 % to 9% by down payment |
| FHA mortgages | 6 % of purchase price |
| VA mortgages | 4 % of purchase price |
| USDA mortgages | 6 % of purchase price |
Conventional loans scale the cap with your down payment. The more equity you bring, the more the seller is allowed to contribute:
| Down payment on a conventional loan | Maximum concession |
|---|---|
| Less than 10% | 3% of value |
| 10% to less than 25% | 6% of value |
| 25% or more | 9% of value |
| Investment property, any down payment | 2% of value |
These tiers come from Fannie Mae's interested-party contribution rules, which govern conventional loans. One VA note: the 4% VA cap applies to true concessions such as prepaids, while ordinary closing costs the seller pays don't count against it.
For a deeper walk through how the caps interact with your down payment size, see how seller credit limits work by loan type.
Seller Concessions Can't Exceed Your Actual Costs
Here is the rule that catches the most buyers: a concession can only pay for costs that exist. If the seller agrees to $5,000 in concessions and your closing costs plus prepaids total $4,200, the extra $800 doesn't come back to you as cash. Unused concession money is simply lost.
In my work as a loan officer, this comes up almost every time a generous credit lands on a file. The fix is to put the excess to work before closing. Two conversions do it:
- Reduce the purchase price by the unused amount, if the contract can still be amended
- Add discount points, which turns the extra credit into a permanently lower rate
Adding points raises your itemized costs, which makes room for the full credit to be used. That change shows up as a corrected Closing Disclosure, which is routine paperwork rather than a setback. The comparison between taking a credit and cutting the price has its own guide in seller credits versus a price reduction.
The practical lesson runs the other way too. When you ask for a concession, ask for your real number. Your lender can estimate your total costs and prepaids before your offer goes out, so the request matches what you'll actually owe.
How to Negotiate Seller Concessions
Concessions are common right now. Redfin reports 46 percent of home sellers gave concessions to buyers in May 2026, a record for that month. In buyer-friendly metros the share ran well above half. Asking is not an exotic request; in today's market it is closer to the default.
Sellers say yes most readily when a home has sat on the market, when they've already found their next house, or when the alternative is a price cut that resets the negotiation. A concession costs the seller the same dollars as a price reduction but often reads as an easier give, because the list price stays intact.
The inspection is your second opportunity. Rather than asking the seller to repair a tired water heater on their way out the door, your agent can request a credit for the cost of the work, added to the contract by amendment. You get the money at closing and control the repair yourself.
Two practical rules make the ask land well. Have your lender confirm your loan type's cap before the offer goes out, so you never request a number the loan can't accept. And ask for your estimated costs, not the maximum, since money above your real costs gets lost.
One caution: concessions ride on the appraisal. If the home appraises below the contract price, the lender recalculates the cap against the lower value, and the buyer's concession can shrink at exactly the wrong moment. Pricing the offer realistically protects the credit you negotiated.
Seller Concessions: A Real World Example
A first-time home buyer offers $400,000 on a house, planning 5 percent down. Their loan-to-value ratio is 95 percent, so their conventional loan caps seller concessions at 3 percent of the home's value: $12,000.
Their loan officer estimates $9,800 in closing costs and prepaids. So the buyers ask for $9,800, not the $12,000 maximum, and the seller accepts. The list price holds, the seller avoids a price cut, and the buyers keep almost $10,000 in savings they would have wired to the closing table.
Two weeks later the inspection turns up an aging furnace. Instead of a repair, their agent negotiates a $1,500 credit, added by amendment. Total concessions: $11,300, still under the cap. The lender issues a corrected Closing Disclosure, the closing date holds, and the buyers replace the furnace on their own schedule with their own contractor.
The couple brought their down payment and almost nothing else to closing. Nothing about the deal was unusual; it was just negotiated in the right order, with the cap checked first.
Common Questions About Seller Concessions
Common questions about what seller concessions can pay for, the limits by loan type, and what happens when a credit is bigger than your costs.
