Some offers on this page are from advertisers who pay us, which may affect which products we write about, but not our recommendations. See our Advertiser Disclosure. Seller concessions are at near-record highs in today's buyer's market, so there's a good chance you can negotiate some credits or other help from your lender if you're buying a home.
Just be aware that all major loan programs limit concessions to a small share of the purchase price. It's important to know the limits because if you ask for a higher amount, your lender will reduce your concessions at closing, and you'll get less than you expected. Becoming familiar with the seller concession limits for your loan program before talking with the seller puts you in a stronger negotiating position.
Based on lesser of sale price or appraised value 4% cap on concessions; no cap on standard closing costs Cannot exceed actual closing costs; limit doesn't apply to payments for repairs If you're buying a primary home or a second home with a conventional loan, the cap on concessions depends on the size of your down payment. You're allowed to receive concessions up to 3% if your down payment is under 10%, up to 6% if your down payment is between 10% and 24.99%, and up to 9% if your down payment is 25% or greater. For example, if you buy a home for $450,000 and make a 5% down payment, your maximum concessions are $13,500.
If you put 20% down, you can get up to $27,000 in concessions. Concessions are calculated as a percentage of the purchase price or the appraised value, whichever is lower. You can use concessions to cover closing costs, prepaid expenses, and up to 12 months of homeowners association fees.
You can't use concessions for your down payment or to expand your cash reserves, and you can't apply them toward your minimum borrower contribution. Unlike conventional loans, FHA loans don't limit concessions by down payment size. The maximum seller concessions are 6% of the purchase price or the appraised value, whichever is lower.
That's true even if you're making the minimum possible down payment of 3.5%. "If you are really needing that additional assistance because you don't have a ton of money saved, it may be in your best interest to go in on an FHA loan," says Ashley Harris, director of homebuyer education at Neighbors Bank. You can use seller concessions on an FHA loan to cover closing costs, prepaid expenses, and discount points.
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