Maximum seller concessions depend on your loan type and down payment: FHA allows up to 6% of purchase price, conventional with 5-10% down allows 3%, conventional with 10-25% down allows 6%, VA allows 4%, and USDA allows 6%. These limits cap what the seller can contribute toward your closing costs through the contract.
Maximum Concessions by Loan Type (Table)
Here is a quick reference for maximum seller concessions by loan type:
| Loan Type | Max Concession | Notes |
|---|---|---|
| FHA | 6% | Any down payment amount |
| Conventional (5-10% down) | 3% | Lower limit for smaller down payments |
| Conventional (10-25% down) | 6% | Higher limit for larger down payments |
| Conventional (25%+ down) | 9% | Maximum for larger down payments |
| VA | 4% | Plus reasonable closing costs |
| USDA | 6% | Includes guarantee fee |
What Concessions Can Pay For
Seller concessions can cover: closing costs (loan origination fees, appraisal, title insurance, recording fees), prepaid items (property taxes, homeowners insurance, interest), discount points (buying down your interest rate), and prepaid mortgage insurance. They can also cover repairs negotiated after the inspection.
What They Cannot Pay For
Seller concessions cannot be used for the down payment (except for VA loans where the seller can pay the buyer's debts). They also cannot exceed the actual closing costs, even if the limit is higher. Any excess beyond actual costs is considered a seller credit that reduces the purchase price.
How to Request Concessions
You request seller concessions as part of your initial offer. The contract will specify the amount the seller is contributing toward your closing costs. Your agent will help you phrase this in the offer. The seller can accept, counter, or reject the request.
When Sellers Are More Likely to Agree
Sellers are more likely to agree to concessions when: the market is balanced or buyer-friendly, the home has been on the market for a while, you're offering full price or close to it, or the seller is motivated (relocation, divorce, already moved out). In a hot seller's market, concessions are harder to get.
Negotiation Strategy
A common strategy is to offer slightly above asking price with a concession request that covers your closing costs. The seller nets the same amount, and you reduce your out-of-pocket expenses. Always work with your agent to structure the offer in a way that appeals to the seller while meeting your needs.
