Closing costs and closing day
Seller concessions: how much the seller can pay toward your costs
Asking the seller to pay some of your closing costs can cut the cash you need at the closing table. But lenders cap how much a seller and other interested parties can contribute, and the caps depend on your loan type and down payment. Ask for too much and the extra may be wasted or even shrink your loan.
Reviewed November 2026 · Written for Buy Home Tips from the sources listed below
Closing costs commonly add thousands of dollars to what you need at closing. The CFPB notes that who pays which fees can be negotiated between buyer and seller. A seller concession, or credit, shifts some of those costs to the seller in exchange for a price or terms that still work for them.
What counts
Fannie Mae describes interested party contributions as money from third parties with a vested interest in the sale, such as the seller, builder or real estate agent, used to cover costs that are typically the buyer's. These can pay for closing costs, prepaid items such as taxes and insurance and discount points to buy down your rate.
Lenders treat these contributions carefully because a large credit can hide an inflated price. That is why each program sets limits.
The limits by loan type
| Loan type | Typical limit |
|---|---|
| Conventional, over 90% loan-to-value | 3% |
| Conventional, 75.01% to 90% | 6% |
| Conventional, 75% or less | 9% |
| Conventional, investment property | 2% |
| FHA | 6% of the sales price |
| VA concessions | 4% of reasonable value |
For conventional loans, Fannie Mae bases the percentage on the lower of the sales price or the appraised value. For FHA, HUD's handbook caps contributions toward origination fees, other closing costs, prepaid items and discount points at 6 percent of the sales price. For VA, the 4 percent limit applies to concessions such as paying your funding fee or debts, while credits for normal closing costs are not limited by VA. USDA has its own rules; ask your lender.
Credits cannot exceed your costs
Fannie Mae says contributions can only be used for closing costs and prepaid items and cannot exceed those actual costs. Anything over that is treated as a sales concession, which reduces the value used to figure your loan. HUD similarly treats contributions above actual costs or above 6 percent as an inducement to purchase that reduces the property's value for the loan.
In practice, if you negotiate a $12,000 credit but your costs are only $9,000, you may not get the extra $3,000, and it can cause problems with your loan.
How to ask
- State a dollar amount in the offer, such as "Seller to credit buyer $8,000 toward closing costs and prepaids."
- Price it in. Some buyers offer a higher price in exchange for a credit. The home still has to appraise at that price.
- Leave room. If your costs fall, unused credit may be lost. Some contracts let credits apply to any allowable cost.
- Tell your lender right away so the credit is reflected in your loan approval and disclosures.
When concessions are hard to get
In competitive markets, sellers may reject offers with credits. A smaller credit, a lender credit in exchange for a slightly higher rate or a gift from family may fill the gap instead.
Check your Closing Disclosure
Any agreed seller credit should appear on your Closing Disclosure. The CFPB's explainer shows where credits and adjustments appear in the cash-to-close calculation. Compare it with your contract before you sign.
The bottom line
Seller concessions can lower your cash to close, but limits depend on your loan type and down payment, and credits cannot exceed your costs. Use your Loan Estimate to size the request and confirm it on your Closing Disclosure.
Mini calculator: the most a seller can contribute
Pick the loan type and enter the price and appraised value. The result shows the program's contribution limit.
Fannie Mae limits apply to a principal residence; FHA and VA rules are summarized. USDA has its own rules. Your lender confirms what counts.
Requesting seller concessions
- Estimate your closing costs and prepaid items from your Loan Estimate.
- Check the concession limit for your loan type and down payment.
- Ask for a dollar amount, not a vague promise.
- Make sure the credit does not exceed your expected costs.
- Confirm the credit appears on your Closing Disclosure.
- Tell your lender about any concession as soon as it is agreed.
Questions buyers ask
What are seller concessions?
They are costs the seller, or another party with an interest in the sale, agrees to pay on your behalf, usually as a credit toward closing costs, prepaid items or discount points. Fannie Mae calls these interested party contributions.
How much can a seller pay on a conventional loan?
Fannie Mae limits interested party contributions for a principal residence to 3 percent when the loan-to-value is over 90 percent, 6 percent from 75.01 to 90 percent and 9 percent at 75 percent or less, based on the lower of the price or appraised value.
How much can a seller pay on an FHA loan?
HUD's handbook caps interested party contributions at 6 percent of the sales price. They may not be used toward your minimum required investment.
How much can a seller pay on a VA loan?
VA limits seller concessions to 4 percent of the home's reasonable value. Credits for your normal closing costs do not count toward that 4 percent.
Sources checked for this page
- Fannie Mae Selling Guide B3-4.1-02: interested party contributions
- HUD Handbook 4000.1, Update 18 (August 2026)
- VA: funding fee and closing costs
- CFPB: what fees or charges are paid when closing on a mortgage
- CFPB: Closing Disclosure explainer
Checked November 2026. Programs and limits change; confirm with the source before you rely on a figure.