Seller Concessions: How to Get the Seller to Pay Your Closing Costs
By De Van Do -- June 11, 2026 -- 9 min read
What Are Seller Concessions and Why Do They Matter
Seller concessions are credits that the seller pays toward the buyer's closing costs as part of the purchase agreement. Instead of receiving the full sale price at closing, the seller agrees to contribute a portion of proceeds toward fees the buyer would otherwise pay out of pocket -- things like origination fees, title insurance, prepaid taxes, and discount points. The net effect is that the buyer brings less cash to the table at closing while the seller receives a slightly lower net amount.
Seller concessions are a legitimate and widely used negotiating tool, particularly in markets where homes sit on the market longer or sellers are motivated to close quickly. For buyers who have sufficient income and credit to qualify for a mortgage but are cash-constrained at closing, concessions can make the difference between a deal that works and one that does not.
The concession amount is negotiated in the purchase contract and must be reviewed and approved by the buyer's lender before closing -- lenders place limits on how much the seller can contribute based on loan type and down payment.
How Seller Concessions Work Mechanically
A seller concession is a contractual agreement embedded in the purchase and sale agreement. The buyer submits an offer that includes a request for a specific dollar amount or percentage of the purchase price as a seller credit toward closing costs. If the seller accepts, the credit appears on the Closing Disclosure as a line item.
The seller does not write a check to the buyer -- the credit simply reduces the amount the seller receives at closing. The purchase price stays the same on paper, but the seller's net proceeds are reduced by the concession amount. This distinction matters because lenders base the loan on the purchase price, not the net proceeds.
Lenders have specific rules about how large a concession can be and what it can be applied toward. Concessions that exceed allowable limits may require price adjustments or be disallowed entirely. Always confirm the concession amount is within your loan program's guidelines before finalizing the offer.
Concession Limits by Loan Type
Lender limits on seller concessions vary by loan program and down payment percentage. Conventional loans follow Fannie Mae and Freddie Mac guidelines: with less than 10 percent down, the seller can contribute up to 3 percent of the purchase price; with 10 to 25 percent down, the limit is 6 percent; with more than 25 percent down, the limit is 9 percent.
FHA loans allow seller concessions up to 6 percent of the purchase price regardless of down payment. VA loans cap seller concessions at 4 percent of the purchase price for certain costs -- though the VA has a broad definition of what counts as a concession, including paying off the buyer's debts, which conventional and FHA do not permit. USDA loans allow up to 6 percent.
If your requested concession exceeds the program limit, the excess is not automatically lost -- the purchase price may be adjusted to bring the concession within limits, provided the property appraises at the adjusted price. This is a negotiating nuance worth discussing with your loan officer before making the offer.
What Seller Concessions Can Be Applied To
Seller concessions can be used to cover standard closing costs -- origination fees, appraisal, title search and insurance, recording fees, prepaid interest, and property tax escrow setup. They can also be used to buy down the mortgage interest rate through discount points, which reduces the monthly payment for the life of the loan.
What concessions generally cannot cover is the down payment itself. The down payment must come from the buyer's own funds or a permitted gift source -- using a seller concession to fund the down payment is not allowed under conventional, FHA, VA, or USDA guidelines. This is a meaningful distinction: concessions help with the transaction costs of buying but do not reduce the equity requirement at closing.
Buyers who confuse the two sometimes discover at the last moment that their concession cannot be applied the way they expected, creating a closing-day cash shortfall. Clarify the intended application with your loan officer early in the process.
When to Ask for Seller Concessions
The right time to ask for concessions is when the market conditions support it. In a buyer's market -- where homes are sitting, inventory is high, and sellers are competing for buyers -- requesting concessions is natural and often accepted without significant price negotiation. In a seller's market with multiple competing offers, asking for concessions may cost you the deal or require offering a higher purchase price to offset the seller's reduced net.
The strategic question is whether a higher purchase price with concessions or a lower purchase price without them produces the better financial outcome. Generally, if the higher purchase price causes your monthly payment to increase by less than what you save in upfront costs, and you plan to stay long enough to recoup, the concession-plus-higher-price structure can make sense.
Run both scenarios through the mortgage calculator with your loan officer before deciding. The break-even calculation -- how long until the monthly payment premium of the higher price exceeds the closing cost savings -- tells you which option is better for your expected holding period.
Negotiating Concessions Effectively
The most effective way to negotiate concessions is to present them as part of a clean, strong offer on other dimensions. A full-price offer with a concession request is often more compelling to sellers than a below-ask offer with no concession -- the seller can clearly see their net is similar while the transaction is less risky.
In competitive situations, including an escalation clause alongside a concession request can thread the needle between competitiveness and affordability. Be specific in the dollar amount you request rather than a percentage -- it is easier for sellers and their agents to evaluate a clear number.
Always have your lender confirm the concession amount is within program limits before submitting the offer, so the deal does not unravel in underwriting. A concession that exceeds the program cap after appraisal is one of the most frustrating late-stage complications in a purchase transaction -- and it is entirely preventable with one quick conversation before the offer goes in.
Seller Concessions vs. Price Reductions
A seller concession and a price reduction are economically similar but mechanically different, and buyers sometimes conflate them. A price reduction lowers the purchase price and therefore the loan amount and monthly payment -- the buyer saves money every month for the life of the loan. A seller concession reduces the cash needed at closing but does not reduce the loan amount or monthly payment.
Over 30 years, a price reduction saves significantly more money than an equivalent concession. However, for cash-constrained buyers who need help with closing costs now, the concession provides immediate value even if the long-term math slightly favors a price reduction.
If you have a choice between a $10,000 price reduction and a $10,000 seller concession toward closing costs, and you have sufficient cash for closing either way, take the price reduction -- it reduces your loan balance and total interest paid. If you need the cash at closing, the concession is the practical choice. Match the tool to your actual financial situation.
Appraisal Considerations
One important constraint on seller concessions is that they are subject to the property appraisal. If the seller accepts a purchase price of $420,000 with a $10,000 concession, but the property appraises at $410,000, the lender will base the loan on $410,000 -- and the concession is now calculated against the lower appraised value, potentially reducing or eliminating it.
In a market with appraisal risk, buyers requesting concessions should build appraisal contingency protection into their offer. If the appraisal comes in low, you will need to renegotiate both the purchase price and the concession amount simultaneously.
Understanding this interaction before making the offer prevents late-stage surprises that can threaten the transaction. Buyers who structure their offers with an awareness of appraisal risk -- using realistic comparable sales rather than aspirational price points -- are far less likely to encounter this problem at the worst possible moment.
Calculate Your Full Closing Costs
See exactly how much cash you need to close -- with and without concessions.
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About the author
De Van Do has a background in technology and built VisualMortgage out of curiosity about making mortgage math transparent. De Van Do is not a licensed loan officer or mortgage broker -- for advice specific to your situation, consult a licensed mortgage professional. Read more about VisualMortgage.