Last Updated: January 2026

Seller concessions are one of the most valuable negotiating tools in real estate, yet many home buyers don't know they exist or how to ask for them. Simply put, seller concessions allow the home seller to pay a portion of your closing costs, potentially saving you thousands of dollars when you buy a home.

Whether you're a first-time home buyer trying to conserve cash or a seasoned investor looking to maximize your purchasing power, understanding how seller concessions work can give you a significant advantage in any real estate transaction.

What Are Seller Concessions?

Seller concessions, also called seller credits, seller contributions, or seller assist, are funds the home seller agrees to pay toward the buyer's closing costs as part of the purchase agreement. Instead of reducing the home's sale price, the seller provides a credit that appears on the closing disclosure and is applied directly to the buyer's settlement charges.

For example, if you're buying a $350,000 home with $12,000 in closing costs, you might negotiate $8,000 in seller concessions. At closing, the seller's net proceeds are reduced by $8,000, and that amount covers most of your fees.

What Can Seller Concessions Pay For?

Seller concessions can cover a wide range of buyer closing costs, including:

• Loan origination fees and discount points
• Title insurance (both lender's and owner's policies)
• Appraisal fees
• Home inspection costs
• Attorney or settlement fees
• Recording fees and transfer taxes
• Prepaid items like property taxes and homeowners insurance
• HOA transfer fees
• Survey costs
• Credit report fees

However, seller concessions cannot be used for:

• Your down payment
• Cash back to the buyer
• Personal debts or expenses outside the transaction

Seller Concession Limits by Loan Type

Lenders and government loan programs set maximum limits on how much a seller can contribute. These limits protect against artificially inflated sale prices and ensure buyers have real equity in their homes.

Conventional Loan Seller Concessions

For conventional loans (backed by Fannie Mae and Freddie Mac), seller concession limits depend on your down payment and whether the property is your primary residence, second home, or investment property:

Example: If you're buying a $400,000 primary residence with 5% down ($20,000), the maximum seller concession is $12,000 (3% of $400,000). With 15% down, you could receive up to $24,000 (6%).

FHA Loan Seller Concessions

FHA loans allow seller concessions up to 6% of the sale price, regardless of your down payment. This generous limit makes FHA loans attractive for buyers who need help with closing costs.

For a $300,000 home with an FHA loan, the seller could contribute up to $18,000 toward your closing costs.

VA Loan Seller Concessions

VA loans have a unique structure for seller concessions:

• Normal closing costs: Sellers can pay all of the buyer's normal closing costs (no limit)
• Concessions limit: Up to 4% of the sale price for additional items like prepaid taxes, insurance, and paying off the buyer's debts

The 4% limit applies to items that go beyond traditional closing costs. In practice, VA buyers often receive the most generous seller contributions.

USDA Loan Seller Concessions

USDA Rural Development loans allow seller concessions up to 6% of the sale price. This can cover closing costs, prepaid items, and even the upfront guarantee fee.

How to Ask for Seller Concessions

Successfully negotiating seller concessions requires strategy, timing, and understanding of market conditions. Here's how to approach it:

1. Understand Your Market

Market conditions dramatically affect your negotiating power:

• Buyer's market: More homes for sale than buyers. Sellers are motivated and concessions are common. You might negotiate 3-6% without much pushback.
• Balanced market: Supply and demand are roughly equal. Concessions are possible but require good justification and negotiation.
• Seller's market: Multiple offers on homes. Asking for concessions may cause sellers to reject your offer entirely.

Your real estate agent can analyze local market data to help you determine what's realistic.

2. Calculate Your Actual Closing Costs

Before making an offer, get a Loan Estimate from your lender that shows your projected closing costs. This helps you request a specific, justified amount rather than an arbitrary percentage.

Typical buyer closing costs range from 2% to 5% of the purchase price. On a $350,000 home, expect $7,000 to $17,500 in closing costs.

3. Include Concessions in Your Offer

There are two main ways to structure an offer with seller concessions:

Option A: Raise the offer price

Increase your offer to offset the concession. For example, if a home is listed at $350,000 and you want $10,000 in concessions, offer $360,000 with $10,000 in seller-paid closing costs. The seller's net is still $350,000.

Option B: Request concessions at list price

Offer $350,000 with $10,000 in concessions. The seller nets $340,000. This works better in buyer's markets or when the property is overpriced.

4. Justify Your Request

Give the seller a reason to agree to concessions:

• Point out how long the home has been on the market
• Reference comparable sales that sold for less
• Note any needed repairs or updates
• Emphasize that you're a qualified, motivated buyer
• Show that you're flexible on other terms (closing date, contingencies)

5. Negotiate After Inspection

If you didn't get concessions initially, the home inspection provides another opportunity. Instead of asking for repairs, request a credit that you can apply to closing costs or use for repairs after closing.

Seller Concessions: Pros and Cons

Advantages for Buyers

• Reduces cash needed at closing: Keep more money in your pocket for moving expenses, furniture, or emergency reserves
• Makes homeownership accessible: Especially helpful for first-time buyers who've saved for a down payment but not closing costs
• Can buy discount points: Use concessions to buy down your interest rate, saving money over the life of the loan
• Flexible application: Apply the credit to various closing costs based on your priorities

Disadvantages for Buyers

• Higher purchase price: If you raise your offer to offset concessions, you're financing more
• More interest over time: A higher loan balance means more interest paid over 30 years
• Appraisal risk: Inflated prices may not appraise, complicating the transaction
• May weaken your offer: In competitive markets, clean offers without concession requests are more attractive

Advantages for Sellers

• Attracts more buyers: Offering concessions expands your pool of potential buyers
• Faster sale: Buyers who don't have to save as much for closing costs can move faster
• Higher sale price: If buyers increase their offer to offset concessions, your recorded sale price is higher
• Competitive advantage: In balanced markets, offering concessions can differentiate your listing

Disadvantages for Sellers

• Lower net proceeds: Concessions directly reduce what you walk away with
• Appraisal concerns: If the home doesn't appraise at the inflated price, you may need to renegotiate
• May attract weaker buyers: Buyers who can't cover closing costs may also struggle with mortgage payments

Seller Concessions vs. Price Reduction: Which Is Better?

Both strategies reduce what the buyer pays, but they work differently:

Bottom line: If you have cash to cover closing costs, a price reduction saves you more money over the life of the loan. If you're short on cash but have strong income, concessions help you buy now without depleting your savings.

Real-World Seller Concession Scenarios

Scenario 1: First-Time Buyer with FHA Loan

Sarah is buying her first home for $280,000 with an FHA loan and 3.5% down payment ($9,800). Her closing costs total $9,500.

Without concessions: Sarah needs $19,300 in cash ($9,800 + $9,500)

With 3% concessions ($8,400): Sarah needs $10,900 ($9,800 + $1,100)

The seller concessions let Sarah keep nearly $8,400 in her savings account for moving expenses and home improvements.

Scenario 2: Negotiating After Inspection

Mike and Lisa are under contract on a $425,000 home. The inspection reveals the HVAC system needs replacement ($8,000). Instead of asking the seller to replace it, they request an $8,000 credit.

The credit covers most of their closing costs, and they can get three quotes and hire their preferred HVAC company after closing, potentially saving money and getting exactly what they want.

Scenario 3: Buyer's Market Advantage

A home listed at $375,000 has been on the market for 60 days with no offers. Tom offers $365,000 with $7,500 in seller concessions, pointing out comparable homes that sold for less.

The motivated seller accepts, happy to finally have a qualified buyer. Tom's effective cost is $357,500 ($365,000 minus the $7,500 in avoided closing costs).

Common Questions About Seller Concessions

Tips for Negotiating Seller Concessions Successfully

1. Get pre-approved first: Sellers take your offer more seriously when you have financing lined up
2. Know your loan limits: Don't request more than your loan type allows
3. Request a specific amount: "$8,500 toward closing costs" is better than "3% concessions"
4. Be flexible elsewhere: Offer a quick closing or fewer contingencies to sweeten the deal
5. Work with an experienced agent: Ask potential agents about their experience negotiating concessions
6. Consider the seller's perspective: A motivated seller may prefer concessions over lowering their list price (for reasons like equity or comparable sales)
7. Have a backup plan: If concessions are rejected, know your walk-away point or alternatives

Final Thoughts: Making Seller Concessions Work for You

Seller concessions are a powerful tool that can make homeownership more accessible by reducing the cash you need at closing. Whether you're a first-time buyer stretching to afford your dream home or a seller looking to attract more offers, understanding how concessions work puts you in a stronger negotiating position.

The key is matching your strategy to market conditions. In buyer's markets, concessions are common and expected. In seller's markets, you may need to get creative, using inspection findings or offering other favorable terms to justify your request.

Remember:

• Know your loan's concession limits before making an offer
• Calculate your actual closing costs so you request the right amount
• Consider how concessions affect your total loan amount and long-term costs
• Work with a knowledgeable real estate agent who understands local market dynamics

With the right approach, seller concessions can save you thousands of dollars and help you close on your new home with more money in the bank.