What Are Seller Concessions and Is It Normal to Ask for Them?

Seller concessions, also called seller credits, are money the seller agrees to put toward your costs at closing. It's normal to ask, and in many markets it's a common part of negotiation. Whether the seller says yes depends on the price, how long the home has been listed, and your loan's limits.

What concessions can pay for

Typically, eligible buyer costs: lender fees, title and settlement fees, prepaid items like insurance and property tax deposits, discount points, and sometimes a rate buydown. They generally can't cover your down payment or your required reserves. Fannie Mae says it doesn't permit these contributions to be used for the down payment, reserve requirements, or minimum borrower contribution. And you generally can't take unused credit as cash.

The limits by loan type

These are program maximums, not amounts the seller has to give.

• Conventional (primary residence): Fannie Mae's tiers are 3% of the price if you put down less than 10%, 6% if you put down 10% to under 25%, and 9% at 25% down or more. Investment properties are 2%.
• FHA: generally up to 6% of the sales price toward eligible costs.
• VA: generally 4% for items VA defines as seller concessions. Normal seller-paid closing costs and reasonable discount points are treated separately.

Example: on a $400,000 purchase with 10% down on a conventional loan, the cap is generally 6%, or $24,000, but only up to the amount of your eligible costs. Your lender confirms the exact figure.

Is it normal to ask?

Yes. Concessions are negotiated as part of the contract. In slower conditions, sellers are often more open. Realtor.com reported that about 22% of Baltimore-area listings had a price cut in September 2026, which tells me sellers are adjusting. In a competitive situation, asking can weaken your offer. Your agent can check days on market and recent price changes before you decide.

Credit or price cut?

A credit lowers your cash at closing but not your loan balance or monthly payment. A lower price reduces both, and reduces property taxes. A credit can be better if cash is tight, or if you want to buy down your rate. A lower price can be better if you want the smallest long-term cost. Ask your lender to run both versions.

Credits instead of repairs

After an inspection, a seller credit can replace a repair. The CFPB notes that if a seller hasn't fixed something they agreed to fix, a credit may be used toward closing costs instead. Make sure your lender allows it, and that you're comfortable doing the repair yourself.

How to ask without hurting your offer

1. Ask your agent what's typical for that price range and condition.
2. Offer a clean structure, like a price and a specific credit amount.
3. Keep your other terms strong, like a firm closing date.
4. Know your lender's cap before you write the number.

FAQ

What does $5,000 in seller concessions mean?

The seller agrees to pay up to $5,000 of your eligible closing costs at settlement.

What can seller concessions not pay for?

Generally your down payment, required reserves, or anything beyond your actual eligible costs.

Do concessions affect the appraisal?

They can. Concessions above the program limits can be treated as a price reduction, and an appraisal gap is a separate issue.

Can sellers refuse?

Yes. It's a negotiation, not a right.

Can a credit pay for a rate buydown?

Often, if your loan program allows it and the cost fits within the limits.

Next step

Buying in Maryland or DC? Start with my buyer resources, or contact me. Want to talk it through? Grab a free 15-minute call at calendly.com/michaelwaderealtor/15min. No pressure.