Concessions & credits

Seller concessions and seller credits: limits, price reduction vs credit, and repair trade-offs.

After an inspection or in a slower market, buyers often ask the seller to "help with closing costs" — or to fix something before closing. Each option lands differently on the buyer's cash, the lender's rules and the seller's net. This hub explains concession limits by loan type, when a price reduction beats a credit, and how to handle appliances and furniture in the deal.

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Quick answer

A seller concession (often written as a seller credit) is money the seller pays toward the buyer's closing costs or prepaids; it cannot exceed the buyer's actual allowable costs and usually cannot be taken as cash. Lenders cap it: for a conventional primary-residence loan, Fannie Mae allows 3% of price with under 10% down, 6% with 10–25% down and 9% with more than 25% down (2% on investment property); FHA allows up to 6% and VA treats concessions above 4% as excess. A credit lowers the buyer's cash to close; a price reduction lowers the loan, payment and tax basis. For repairs, a credit or price adjustment is usually cleaner than asking the seller to replace an appliance under deadline.

3 / 6 / 9%

Fannie Mae caps on a primary residence by down payment band

FHA cap on seller contributions toward buyer costs

VA threshold above which concessions are treated as excess

Questions this hub answers

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seller credit
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seller credit vs new appliance
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how much can a seller contribute to closing costs

How to structure a concession or credit

01
Check the buyer's loan program first
The cap depends on loan type, occupancy and down payment. Ask the lender for the maximum before writing the number into the offer or addendum.
02
Match the credit to real costs
A credit can only cover allowable closing costs and prepaids. Any amount beyond the buyer's actual costs is usually lost or forces a renegotiation.
03
Compare credit vs price reduction
A credit puts cash back at closing; a price cut lowers the loan and the monthly payment slightly. Buyers short on cash usually prefer a credit.
04
Decide on repairs vs credit
Seller-done repairs under deadline invite disputes over quality. A credit lets the buyer choose the contractor and the appliance.
05
Treat furniture as separate property
Furniture and movable items are personal property. Lenders generally will not finance them, so list them in a separate bill of sale with no value inside the loan.
06
Write it in the right form
In NWMLS transactions, concessions go in the purchase agreement or an addendum, and repair agreements in the inspection response. Confirm the lender has the final version.

Seller credit vs price reduction vs seller repair

Option	Buyer's cash to close	Loan and payment	Seller's risk
Seller credit toward closing costs	Lower	Unchanged	Low — fixed amount
Price reduction	Slightly lower (down payment)	Lower	Low — may affect appraisal comps
Seller replaces appliance / repairs	Unchanged	Unchanged	Medium — quality and deadline disputes
Furniture included	Unchanged	Not financed	Low with a separate bill of sale

Closing paperwork and calculator on a counter in an appliance showroom

Checklist

Concession checklist for buyers and sellers

Lender has confirmed the maximum concession for this loan and occupancy.
Estimated closing costs and prepaids are at least as large as the credit.
Credit vs price reduction compared on cash-to-close and monthly payment.
Repair items converted to a credit where possible.
Appliances that stay are listed in the purchase agreement.
Furniture and personal property are on a separate bill of sale.
Final numbers match the lender's closing disclosure.

Seller concessions FAQ

How much can a seller contribute to closing costs?

It depends on the loan. Conventional primary-residence loans allow 3%, 6% or 9% of the price depending on down payment; FHA allows up to 6%; VA treats concessions over 4% as excess. Your lender confirms the exact limit.

Is a seller credit better than a price reduction?

For buyers short on cash, a credit usually helps more because it lowers cash to close. A price reduction lowers the loan and payment a little. Sellers often prefer a credit because the recorded price stays higher.

Should I ask for a new appliance or a credit after inspection?

A credit is usually cleaner: you choose the model and installer, and the seller avoids a deadline repair. Check that the credit fits within your loan's concession limit.

Can I sell a house with furniture included?

Yes, but list furniture on a separate bill of sale. Lenders generally do not finance personal property, so its value should not be built into the loan.