Yes, sellers can pay for discount points as part of seller concessions. Instead of reducing the price, the seller can contribute cash toward buying down your rate. Maximum concession amounts vary by loan type. This strategy can save you more than a price cut if you plan to stay in the home long-term.
Concessions for Points
Seller concessions are funds the seller agrees to pay toward the buyer's closing costs. These can include discount points. The seller credits you at closing, and the lender applies the funds to buy down your rate. You get a permanently lower rate without paying for it out of pocket.
Maximum Concession Limits
Maximum seller concessions vary by loan type and down payment: Conventional loans: 3% for 5-9.99% down, 6% for 10-24.99% down, 9% for 25%+ down. FHA loans: 6% of the purchase price. VA loans: 4% of the purchase price. USDA loans: 6% of the purchase price. These limits cover all closing costs including points.
Negotiation Strategy
If the seller is offering a $10,000 price reduction, ask instead for $10,000 in closing cost credits allocated to discount points. The price reduction saves you about $50-70 per month on your payment, while using that same $10,000 for points could reduce your rate by 0.5-0.75% and save $150-225 per month instead. Points nearly always win when the seller is willing to contribute.