Seller concessions.

In plain English

Seller concessions are an agreement where the home seller covers some of the buyer's closing costs, such as loan fees, title charges, or prepaid taxes and insurance. They are negotiated as part of the deal and often raise the agreed sale price a bit, since the seller is effectively rolling those costs in. Concessions help a buyer who has enough for the down payment but is short on cash for closing. Loan programs cap how much of the closing costs a seller is allowed to pay, and those limits depend on the loan type and down payment.

01Why it matters

Concessions can be the difference between closing and not, by cutting the cash you need at the table, though they may nudge your loan amount up.

02The math, step by step

On a $300,000 home, your closing costs run about $9,000. You ask the seller for $6,000 in concessions and they agree, often by accepting your offer at a slightly higher price. You bring $6,000 less to closing, but check your loan program's limit on how much the seller may contribute: FHA loans cap concessions at 6% of the price, while conventional loans cap them by your down payment, commonly 3% with less than 10% down and up to 9% with more.

03What this is NOT

04Receipts

Every figure on this page is sourced to a primary document. Tap to open the original.