In today’s real estate market, both buyers and sellers are feeling the pressure of high home prices and elevated interest rates. For many buyers, the challenge isn’t just qualifying for a mortgage—it’s coming up with extra cash for closing costs, fees, and repairs. That’s where seller concessions can make a big difference. By covering certain buyer expenses, sellers can make their property more attractive and increase the likelihood of a smooth, successful sale.
Why Concessions Matter Now
When mortgage rates were at historic lows, affordability wasn’t as much of a concern, and sellers often received multiple offers. But in today’s market, rising rates and tighter budgets have made concessions a valuable tool. Offering to help with costs can be the deciding factor between a buyer walking away or moving forward. For sellers, this strategy can generate more interest—without reducing the asking price.
Common Types of Seller Concessions
Closing Costs: These include appraisal fees, loan origination fees, title charges, property taxes, attorney fees, inspections, insurance, HOA dues, and more. Covering these can ease the cash burden for buyers.
Rate Buydowns: Sellers can pay for a temporary interest rate reduction, lowering the buyer’s monthly payments without cutting the sale price.
Repairs: Rather than reducing the price, sellers may agree to fund necessary repairs before closing, saving buyers upfront expenses.
Contribution Limits to Keep in Mind
While seller concessions are helpful, they come with limits. Sellers can’t contribute more than the buyer’s total closing costs, and allowable amounts vary by loan type:
Conventional Loans: Sellers may contribute 3%-9% of the purchase price, based on the down payment. For investment properties, the cap is 2%.
FHA and USDA Loans: Sellers may contribute up to 6% of the purchase price.
VA Loans: Sellers may cover all standard closing costs, plus up to 4% for prepaids, consumer debt or the VA funding fee.
Seller concessions can make homes more affordable for buyers and help sellers remain competitive. Because rules vary by loan type and market, both parties should work with a real estate professional.
