Buying a home is exciting, but many buyers focus only on the down payment and forget about another major expense: closing costs. One strategy that can potentially save buyers thousands of dollars upfront is seller concessions.
The difference often isn’t just whether seller concessions are available — it’s how the deal is structured.
Below are some of the most common questions buyers ask.
What are seller concessions?
Seller concessions are when the seller agrees to contribute money toward a buyer’s closing costs and prepaid expenses.
Instead of the buyer paying all costs out of pocket, the seller helps cover certain expenses as part of the transaction.
Examples can include:
- Loan costs
- Title fees
- Lender fees
- Prepaid taxes
- Homeowners insurance escrows
- Discount points to lower interest rates
The result: less cash needed at closing.
Why are seller concessions important?
Many buyers can qualify for the monthly payment but struggle with cash needed upfront.
Closing costs and prepaid expenses can sometimes add thousands of dollars on top of the down payment.
Seller concessions can help reduce the amount buyers need to bring to closing, helping preserve savings for:
- Emergency funds
- Furniture
- Repairs
- Moving expenses
- Future home projects
Can seller concessions save me money?
Yes.
A buyer purchasing a home may discover they need much more than just the down payment. Between prepaid items, escrows, title charges, lender fees, and other costs, expenses can add up quickly.
Properly structured seller concessions may significantly reduce out-of-pocket expenses.
In some situations, buyers choose to use concessions toward discount points to potentially reduce their interest rate instead.
Why doesn’t everyone ask for seller concessions?
Because structure matters.
Simply asking for closing cost assistance isn’t always enough.
Sometimes increasing the purchase price slightly and using seller credits may create a better overall outcome — if the home appraises and the strategy makes sense.
Every loan program also has limits on how much concession is allowed.
This is where experience matters.
Why do I need the right mortgage broker when negotiating seller concessions?
Many people think mortgage shopping is only about getting a rate.
In reality, structuring a deal properly can sometimes save more money than chasing a slightly lower rate.
An experienced mortgage broker should understand:
- Program concession limits
- Debt-to-income impact
- Appraisal considerations
- Seller negotiation strategies
- Closing cost structures
- Ways to maximize buying power
One important detail many buyers do not realize is that seller concession limits vary depending on the loan program and how much money you put down.
Concessions are capped and are not the same for every borrower.
Whether you are using Conventional, FHA, Non-QM, or another loan program, limits may vary. Depending on your scenario, seller concessions commonly range from approximately 3% to 9%.
The right mortgage broker should explain exactly what applies to your situation and help structure the transaction correctly based on your loan type, down payment, and goals.
Accurate numbers matter.
Should I ask for seller concessions?
There isn’t a one-size-fits-all answer.
It depends on:
- Market conditions
- Seller motivation
- Property value
- Loan type
- Closing costs
- Your financial goals
The right strategy depends on your specific situation.
Real Mortgage Guy
Aram Sargsyan (Sam) Licensed Mortgage Loan Originator | NMLS #2505489 Licensed Realtor®
Request a callback or call for more information.
