What Are Seller Concessions? A Complete Guide for Homebuyers (Plus Max Amount by Loan Type)
Last updated 11/28/2025 by
Ante MazalinEdited by
Andrew LathamSummary:
Seller concessions are closing cost contributions that a seller agrees to pay on behalf of the buyer. They can reduce out-of-pocket expenses by covering items like lender fees, taxes, insurance, and even rate buydowns. Each loan type—FHA, VA, USDA, and Conventional—has limits on how much sellers can contribute.
For many first-time homebuyers, saving for a down payment is only half the battle. Closing costs can add another 2%–5% of the purchase price — and that’s where seller concessions can help. A seller may agree to cover part of your closing costs, prepaid expenses, or even discount points to lower your interest rate.
Whether you’re navigating a buyer-friendly market or negotiating with a motivated seller, understanding how seller concessions work can help you secure a more affordable home purchase. And if you’re weighing the trade-offs, read the disadvantages of seller-paid closing costs to understand the full picture.
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What Are Seller Concessions?
Seller concessions are financial contributions from the seller toward a buyer’s closing costs. Instead of the buyer covering all upfront fees, the seller pays part of them at closing.
Seller concessions can cover:
- Lender fees
- Appraisal fees
- Homeowners insurance
- Property taxes
- Title insurance
- Attorney fees
- Discount points
- Rate buydowns
They cannot be used for:
- Down payments
- Reserves
- Minimum borrower contributions (in some loan types)
Good to Know: Seller concessions cannot exceed the buyer’s actual closing costs. You can’t “profit” from concessions — they can only reduce or fully cover eligible expenses.
How Seller Concessions Work
Seller concessions are written into the purchase agreement and paid at closing. Typically, concessions are negotiated in exchange for:
- A slightly higher purchase price
- A faster closing timeline
- Buying the home as-is
This is a strategic negotiation tool. For help, review How to Negotiate a Home Price as a Buyer.
Maximum Seller Concessions by Loan Type
Each mortgage program limits how much sellers can contribute because excessive concessions could artificially inflate home values.
| Loan Type | Max Seller Concessions | Notes |
|---|---|---|
| Conventional | 3%–9% | 3% for <75% LTV; up to 9% for lower LTVs |
| FHA | Up to 6% | Can cover closing costs, prepaid items, and discount points |
| VA | Up to 4% | Additional flexibility for discount points |
| USDA | Up to 6% | May cover buyer’s closing costs and prepaid expenses |
Common Items Seller Concessions Can Cover
Seller contributions often go toward:
- Discount points — prepaid interest to lower your rate (see Seller-Paid Points)
- Rate buydowns (temporary or permanent)
- Recording fees
- Lender underwriting fees
- Escrow fees
- Origination fees
- Title search and title insurance
- Homeowners insurance and taxes (prepaid)
How to Ask for Seller Concessions (Step-by-Step)
Smart Ways to Negotiate Seller Concessions
1. Get pre-approved first
You’ll need to know how much cash you can bring to closing — and where concessions can help.2. Look for motivated sellers
Longer days on market = more willingness to negotiate.
You’ll need to know how much cash you can bring to closing — and where concessions can help.2. Look for motivated sellers
Longer days on market = more willingness to negotiate.
3. Increase your offer slightly
Raising the purchase price can offset the cost of concessions for the seller.
Raising the purchase price can offset the cost of concessions for the seller.
4. Ask for concessions instead of repairs
Some buyers prefer a credit over waiting for repairs to be completed.
Some buyers prefer a credit over waiting for repairs to be completed.
5. Work with a skilled agent
Your agent can identify when concessions are likely to be accepted based on local conditions.
Your agent can identify when concessions are likely to be accepted based on local conditions.
Pros and Cons of Seller Concessions
Bottom Line
Seller concessions are a powerful tool for reducing upfront costs — especially if you’re a first-time buyer, have limited cash on hand, or want to lower your interest rate through discount points. Just be sure the concessions fit within your loan program’s limits and that the appraisal supports the adjusted purchase price.
Key takeaways
- Seller concessions help cover closing costs, prepaid taxes, insurance, and lender fees.
- Each loan type has strict concession limits (typically 3%–9%).
- Concessions must be written into the purchase agreement.
- They reduce out-of-pocket costs but may increase the negotiated purchase price.
- Appraisals must support any price increase connected to concessions.
Here’s How to Get Started
If you’re hoping to use seller concessions, it helps to work with a lender who can structure your loan to maximize benefits while ensuring you stay within program limits.
Smart Move: Always pair a concessions request with a competitive, fair offer — especially in markets where sellers still have negotiating power.
Explore More Ways to Tap Into Your Home’s Equity After You Buy
- Best HELOC Lenders — Compare home equity lines of credit.
- Best Home Equity Loans — Fixed-rate borrowing for major expenses.
- Home Equity Agreements — Access equity with no monthly payments.
Related Home Buying Articles
- Disadvantages of Seller Paying Closing Costs — Understand the trade-offs before negotiating.
- Seller-Paid Points — Learn how sellers can help lower your monthly payment.
- How to Negotiate a Home Price — Tips to secure concessions or a better deal.
- Purchase Agreements Explained — Understand contracts before you make an offer.
- How Much Home Can You Afford? — Plan your budget before touring homes.
FAQs
Are seller concessions the same as closing cost credits?
Yes — seller concessions are a type of closing cost credit that reduces the buyer’s out-of-pocket expenses.
Can seller concessions pay for discount points?
Yes. Many buyers use concessions to fund seller-paid points and permanently lower their interest rate.
Can you use seller concessions for your down payment?
No. Concessions cannot cover down payments or reserves — only eligible closing costs.
Are seller concessions common?
They’re more common in buyer-friendly markets, slower sales periods, or with motivated sellers.
Do seller concessions hurt the appraisal?
They can if the concessions cause the purchase price to exceed the property’s appraised value.
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