Seller concessions
Can the Seller Pay My Closing Costs?
Often, yes — and it is the most underused lever a first-time buyer has. A seller concession is money the seller agrees to put toward your costs at closing. It is negotiated in the purchase agreement, and it comes out of what they walk away with.
What It Can and Cannot Pay
This is where most of the confusion lives, so here it is plainly.
What It Can Cover
- Closing costs — title, settlement, recording, underwriting
- Prepaid items and your initial escrow deposit
- Discount points to buy the rate down
- In some cases, an upfront mortgage insurance premium
What It Cannot Cover
Your downpayment. A seller concession is a credit toward costs, not toward the money you are required to put into the property. That is the single most common thing buyers get wrong about it, and it is why concessions and assistance are two different tools rather than two names for the same one.
How Much a Seller Is Allowed to Give
Every program caps this, and for conventional financing the cap moves with the loan-to-value ratio. Higher leverage, tighter cap.
| Program | Cap on seller-paid costs |
|---|---|
| FHA | 6% of the sales price |
| Conventional, primary residence, loan-to-value above 90% | 3% |
| Conventional, primary residence, loan-to-value 75.01% to 90% | 6% |
| Conventional, primary residence, loan-to-value 75% or less | 9% |
| VA | 4% in seller concessions, plus customary closing costs |
| USDA | 6% of the sales price |
Stacking It with Down Payment Assistance
This is the part worth understanding, because the two tools work on different halves of the problem. Assistance covers the downpayment. A seller concession covers the costs. Use both and what is left for you to bring can get small.
On the FHA scenario I priced in Oakland County, the assistance takes the cash needed at closing down by roughly half. A seller concession works on most of what is left. I have put the actual dollars on one page rather than describing them in the abstract — see how FHA’s 3.5% downpayment lines up with it →
What I will not tell you is that this always works. It depends on the program cap, on what your costs actually are, and on whether a seller in your price range will agree to it at all.
Will Asking for It Weaken My Offer?
Sometimes. That is the honest answer, and it is worth planning around rather than hoping about.
A seller compares offers on what they net, not on the headline price. An offer asking for a concession nets them less than the same price without one, so in a situation with several offers it can be the reason yours loses. In a slower stretch, on a house that has been listed a while, or on new construction where the builder has a budget for it, a concession is routine and frequently volunteered.
There is a structural version of this too: a buyer can offer a little more on price and ask for a concession, so the seller nets about the same while the buyer moves money from closing day into the loan. Whether that works depends on the appraisal supporting the higher price, which is exactly the kind of thing to think through with your agent before you write, not after.
What helps most is being the offer that is easy to say yes to otherwise: a real pre-approval, a clean file, and a lender the listing agent can call. the first-time buyer walkthrough is where that starts
Find Out What You Could Ask For
Tell me the price range you are shopping and I will tell you what the cap would be on your program and what it would realistically do to your cash at closing. Free, no credit pull, and nothing about it starts an application.