Written and reviewed by Kladi Bejkolli
·Mortgage Loan Officer, NMLS #1626841·Last reviewed October 14, 2026
The straight answer
Yes, in many purchases the seller can agree to pay some of your closing costs as a
concession, but there are limits on how much, based on the loan type and your down
payment. It is a negotiation tool with boundaries, not a blank check. Used well, a
concession can meaningfully lower the cash you bring to closing; used without comparing
the full picture, it can quietly inflate the price you pay.
What a seller concession actually is
A seller concession is a credit the seller agrees to contribute toward your closing
costs at closing. It is not cash the seller hands you directly, and it is not a price
reduction. It is a negotiated line in the purchase contract that says the seller will
pay a set amount, up to a cap, toward the fees and prepaids you would otherwise bring to
closing. That credit shows up on your closing paperwork and reduces what you owe.
The term covers a few related arrangements: the seller paying some of your closing
costs, the seller covering points to buy down your rate, or the seller paying a
specific fee like a title charge or a transfer tax. All of them are interests the seller
contributes on your behalf, and all of them are governed by the same idea: there is a
limit on how much a seller can contribute.
How a concession works in practice
The concession is agreed on before you ever get to closing, and it flows through the
paperwork in a few clear steps:
Negotiated in the offer. Your agent writes the concession into the purchase contract, usually as a dollar amount or a percentage of the price. The seller either accepts it, counters it, or declines it, just like any other term of the offer.
Shown on the closing paperwork. The credit appears as a line on your Closing Disclosure, the final statement you review before signing. The CFPB explains exactly where the seller contribution shows up on that form.
Reduces your cash needed at closing. Because the seller's credit is applied against your closing costs, the amount you have to wire or bring to the table drops by that figure. That is the whole point: less upfront cash from you.
The credit is applied to your closing costs, not to your down payment. For most loans,
the down payment still has to come from your own funds, so a concession helps with the
fees and prepaids, not the down payment itself.
Typical limits on how much a seller can contribute
This is where the "blank check" idea falls apart. Loan programs cap how large a seller
concession can be, and the cap depends on your loan type and, for conventional loans,
your down payment. The general shape across programs:
Conventional loans: the cap commonly scales with your down payment. A larger down payment typically allows a larger concession, and a smaller down payment allows a smaller one. Fannie Mae and Freddie Mac each publish their own maximum-concession limits in their guides.
FHA loans: FHA sets its own seller-concession limit, calculated on the lower of the sales price or the appraised value. HUD publishes the current policy in its handbook and mortgagee letters.
VA loans: VA has its own rules for seller concessions, tied to the reasonable value of the property, and the VA explains them on its funding fee and closing costs page.
I am deliberately not quoting exact percentages here, because these are program rules
that change and vary, and the number that applies to you depends on your loan type, your
down payment, and the state where the property sits. Treat any single figure you read as
a starting point and verify the current limit with your loan officer before you build an
offer around it. The cap is also usually measured against the lower of the sales price
or the appraised value, so an appraisal below the contract price can change what a
concession is worth.
How a concession interacts with the price
A seller concession does not come out of nowhere. The seller is giving up money at
closing, so a seller may raise the asking price to offset the concession, or may accept
a concession only on a higher offer. That means you have to compare the full picture,
not just the credit line.
Consider two offers on the same home: one at list price with no concession, and one at
a price a few thousand higher with a concession that covers your closing costs. The
second offer might mean you bring less cash to closing, but it also means you are
financing a higher price, which raises your loan amount and your monthly payment. The
right choice depends on what matters more to you: preserving cash now or keeping your
monthly payment lower. Your agent and your loan officer can lay both out side by side so
you see the tradeoff, not just one number.
When a concession makes sense, and when it does not
A seller concession is most valuable to a buyer who has limited cash for closing costs
but can handle the monthly payment. It can be the difference between a doable purchase
and one that leaves you stretched at the table. It is also useful in a buyer's market or
with a motivated seller who wants to close.
It is not always the best move. If the concession inflates the price you pay, or if it
pushes your loan-to-value in a direction that raises your rate or mortgage insurance,
the "free" credit can cost you more over the life of the loan than it saves you at
closing. In a hot market where the seller has other offers, asking for a large
concession can make your offer less competitive. The concession is one tool in the
negotiation, not an automatic win, and it should always be weighed against the price,
the rate, and your long-term monthly cost.
A worked example on a $300,000 home
Numbers are easier to feel with an example. This one is an illustration, not a quote,
and the concession percentage is a round planning figure, not a program limit. Your
actual cap depends on your loan type and down payment, so verify it before you build an
offer around it.
Illustration only, not a quote
Purchase price: $300,000
Estimated closing costs at roughly 3.5% of the price: about $10,500
Down payment at 10%: $30,000 (a separate bucket, paid from your own funds)
Cash to close without a concession: about $40,500 (down payment + closing costs)
Seller concession at 3% of the price: about $9,000
Closing costs after the concession: about $1,500 ($10,500 minus $9,000)
Cash to close with the concession: about $31,500 ($30,000 down payment + $1,500)
In this illustration, the concession reduces the cash you bring to closing by about
$9,000, from roughly $40,500 to $31,500. The down payment stays the
same; the concession is applied to the closing costs, which is how the math works on
most loans.
Assumptions: a $300,000 purchase price, estimated closing costs at roughly 3.5% of
the purchase price, a 10% down payment, and a seller concession of 3% of the purchase
price applied to closing costs. This is an illustration only: the 3% concession is a
round planning figure, not a program limit. Actual seller-concession caps vary by
loan type and down payment and must be verified for your situation. Closing costs,
down payment requirements, and program limits all vary by loan type, location, and
lender. Not a quote, not an offer of credit, and not a promise of approval.
Key takeaways
A seller concession is a credit the seller contributes toward your closing costs, negotiated in the contract and shown as a line on your closing paperwork.
Loan programs cap how large a concession can be, and the cap depends on your loan type and down payment, so verify the current limit rather than assuming a number.
A concession lowers your cash needed at closing, but compare the full picture, because a seller may raise the price to offset it.
Concessions help buyers with limited cash, but they usually cannot cover your down payment, and the right move depends on your whole offer, not just the credit.
Frequently asked questions
Can a seller concession cover my down payment?
Generally no. For most loans, the down payment must come from your own funds, and a
seller concession is applied to your closing costs, not your down payment. Some
programs have narrow exceptions for certain borrower situations, so if your goal is to
reduce the cash you need for a down payment, ask your loan officer what your specific
program allows rather than assuming a concession can do it.
Does a concession hurt the seller's net?
Yes, it can. A concession reduces what the seller nets from the sale, which is exactly
why sellers weigh it against the offer price. That is why a seller may accept a
concession only on a higher price, and why you should compare the full picture: the
price, the concession, and your long-term monthly cost, not just the credit line.
How do I know what concession limit applies to me?
Your loan officer confirms the current cap for your loan type, your down payment, and
the state where the property sits. Because the limits vary by program and change over
time, the reliable number is the one verified for your specific offer, not a figure you
read somewhere else.
Kladi Bejkolli is a Mortgage Loan Officer and Branch Manager at West Capital Lending,
Inc. (NMLS #1566096), licensed in 26 states plus Washington, D.C. He founded and owned
Besa Home Mortgage, and he writes and reviews every guide on this site. NMLS #1626841.
Last reviewed October 14, 2026
Get a Cash-to-Close Review before you commit to a number.
A Cash-to-Close Review is the full picture of the money you will bring to closing, item
by item: down payment, closing costs, prepaids, and any seller concession or lender
credit you negotiated. Tell Kladi your price range and the state your property is in or
will be in, and he will run the numbers with every assumption labeled. Free, plain
language, and no obligation.
General education only: not a quote, an offer of credit, or a promise of approval.
Programs and guidelines vary by state, product, and borrower profile. Seller-concession
limits change and vary by loan type and down payment, so verify the current cap for your
situation rather than relying on any figure in this article. Figures shown are
illustrative and based on the assumptions listed. Confirm your numbers with Kladi
directly.
Next step
See how a concession changes your cash to close.
Tell Kladi your price range and the state your property is in or will be in, and he will show you what a seller concession could do for your closing costs, with the tradeoffs visible.
