Seller Concessions: Getting the Seller to Pay Your Closing Costs

The down payment gets all the attention, but closing costs are the expense that quietly catches first-time buyers off guard — another 2% to 5% of the loan due in cash at the table. Seller concessions are one of the most effective ways to shrink that bill. When you negotiate a concession, the seller agrees to credit you money at closing to cover some of your costs, which can save you thousands in upfront cash. It's a standard, lender-approved tool, but it comes with limits and trade-offs that are worth understanding before you ask. Here's how to use it well.

What a seller concession is

A seller concession (also called a seller credit or seller-paid costs) is money the seller agrees to put toward your closing costs as part of the purchase deal. Crucially, it covers closing costs — it generally cannot be applied to your down payment. The down payment still has to come from you (or from gift funds or assistance programs).

What concessions can cover includes lender fees (origination, underwriting), third-party fees (appraisal, title insurance, recording), prepaid items (property taxes and homeowners insurance going into escrow, prepaid interest), and even mortgage discount points to buy down your rate. For the full catalog of what counts as a closing cost, see closing costs explained.

Why a seller would agree to this

It feels like the seller is just handing you money, but it often serves them too:

• It moves the home. In a slow or balanced market, a credit toward your costs is an attractive incentive that closes the deal without dropping the headline price.
• It keeps comparable sales high. A seller may prefer a $310,000 price with a $6,000 credit over a $304,000 price, because the recorded sale price props up the value of nearby homes — including others they may own.
• It can be cheaper than repairs. Rather than fixing issues an inspection turned up, a seller may credit you cash and let you handle them.

Understanding the seller's motivation helps you frame the ask in a way they'll accept.

The limits: how much you can get

Lenders cap concessions to prevent inflated prices, and the cap depends on your loan type and down payment. As of 2026, the general limits (as a percentage of the home's price or value) are:

Conventional loans

Tied to your down payment on a primary or second home:

• Less than 10% down: up to 3%
• 10% to 25% down: up to 6%
• More than 25% down: up to 9%
• Investment property: capped at 2% regardless of down payment

FHA loans

Up to 6% of the sale price, regardless of down payment.

VA loans

The structure is different. "Seller concessions" beyond paying your normal closing costs are capped at 4% of the value, but that 4% applies to specific items (like prepaying taxes or paying off your debts) — the seller can pay all your standard closing costs separately, on top of that 4%. VA buyers often get the most help. See VA loans explained.

USDA loans

Up to 6% of the sale price.

A critical rule across all loan types: you can't receive more concession than you actually have in costs. If your closing costs total $7,000 and the seller offers $10,000, you only get $7,000 — the excess can't be pocketed or shifted to your down payment.

A worked example

You're buying a $320,000 home with a conventional loan and 5% down:

• Down payment (5%): $16,000 — your responsibility
• Loan amount: $304,000
• Closing costs (~3%): ~$9,100

With less than 10% down, your concession cap is 3% of $320,000 = $9,600 — comfortably more than your $9,100 in costs. You negotiate a $9,000 seller credit. Your cash to close drops from about $25,100 to roughly $16,100 — essentially just the down payment. That $9,000 staying in your pocket can rebuild your emergency fund or cover moving expenses.

Run your real numbers — the $304,000 loan, your taxes, and insurance — through the mortgage calculator so you know the monthly payment, and remember the concession affects only your upfront cash, not the payment.

How to negotiate concessions

A few practical tactics:

• Ask in the offer. The cleanest way is to build the credit into your initial offer: "$320,000 with $9,000 toward buyer's closing costs." Your agent will structure the language.
• Use a higher price to fund it. In a market where the home would appraise for more, you can offer slightly above asking in exchange for a credit — for example $315,000 with a $6,000 credit instead of $309,000 flat. You finance the small extra over 30 years while keeping cash today. Just make sure the higher price still appraises, or you'll have to cover the gap.
• Lean on inspection findings. If the inspection reveals issues, request a credit instead of repairs so you control the work and timing.
• Read the market. Concessions are easy to win in a buyer's market with homes sitting unsold, and hard in a hot seller's market with multiple bids. Match your ask to conditions.

The trade-offs and limits to watch

Concessions are powerful but not free of catches:

• The appraisal must support the price. If you raise the price to fund a credit and the home appraises low, the lender lends on the lower value and you cover the shortfall in cash. This is the most common way the strategy backfires.
• A higher price means a bigger loan. Funding a credit by bumping the price increases your loan, payment, and total interest. The math can still favor you if cash is tight now, but know you're financing those costs over the life of the loan.
• You can't exceed your actual costs. Don't over-ask; the unused portion is simply lost, not refunded.
• Buy down your rate with it. One of the best uses of a concession is paying for discount points to permanently lower your rate — see mortgage points explained. A seller-funded buydown can be worth more over time than the same cash toward fees.

The bottom line

Seller concessions are one of the highest-leverage tools a buyer has for reducing the cash needed to close — often cutting your out-of-pocket down to roughly just the down payment. They cover closing costs (not the down payment), they're capped by loan type and down payment, and they work best in markets where sellers need to compete. Build the request into your offer, make sure the price still appraises, and consider using the credit to buy down your rate rather than just cover fees. Before you finalize the numbers, run the loan amount, taxes, and insurance through the mortgage calculator so you can see exactly how the deal shapes both your upfront cash and your monthly payment.