Seller assist, sometimes called a seller concession, is money the seller credits toward your closing costs at settlement. It lowers the cash you bring to the closing table, but it comes with strict ceilings: every major loan program caps the contribution somewhere between 2% and 9% of the purchase price, the credit can never exceed your actual closing costs, and none of it can go toward your down payment.
What Seller Assist Can Pay For
The credit applies to fees you would otherwise pay out of pocket at closing. That includes loan origination charges, title insurance, the appraisal, recording fees, prepaid property taxes, prepaid homeowners insurance, and the per-diem interest that accrues between closing and your first mortgage payment.1National Association of REALTORS®. Seller Concessions: A Guide for REALTORS – Section: What Costs Do Seller Concessions Cover?
You can also point the credit at your interest rate. Discount points bought with seller funds permanently lower your rate, and a temporary buydown drops the rate for the first one to three years of the loan. Fannie Mae permits temporary buydowns of up to three years, with the rate rising by no more than one percentage point each year, and the lender still qualifies you at the full note rate.2Fannie Mae. Temporary Interest Rate Buydowns If you plan to stay put for several years, applying the credit to rate rather than one-time fees can be the better use of the same dollars.
Two hard limits apply across every program. Seller assist cannot fund your down payment. And if the concession exceeds your actual closing costs, the excess either goes to discount points or gets trimmed. You never receive the surplus as cash.
How Much You Can Ask For
Each loan program sets its own cap, and the caps exist to keep sale prices from being inflated past what the home is worth.
FHA
FHA allows seller contributions up to 6% of the sales price. Anything above that gets subtracted from the sale price dollar for dollar before the lender calculates the loan-to-value ratio.3Department of Housing and Urban Development. Seller Concessions and Verification of Sales (Mortgagee Letter 2005-02) On a $300,000 home, that ceiling is $18,000.
Conventional (Fannie Mae and Freddie Mac)
Conventional loans use a tiered cap based on loan-to-value ratio and occupancy:
- LTV above 90% (down payment under 10%): 3% maximum
- LTV between 75.01% and 90% (down payment of 10% to about 25%): 6% maximum
- LTV at or below 75% (down payment of 25% or more): 9% maximum
- Investment properties at any LTV: 2% maximum
Concessions above these limits get treated as a price reduction, and the lender deducts the overage from the sale price before calculating the loan.4Fannie Mae. Interested Party Contributions (IPCs) Freddie Mac follows the same tiers.
VA
VA rules split the picture. There is no cap on seller credits toward the buyer’s ordinary closing costs like the appraisal, title work, and recording fees. The 4% limit applies only to what the VA defines as concessions: credits toward the VA funding fee, payoff of the buyer’s debts, and prepaid hazard insurance for the buyer.5Veterans Affairs. VA Funding Fee And Loan Closing Costs – Section: Can the seller pay for my closing costs? That 4% is measured against the home’s reasonable value on the VA Notice of Value, not the loan amount. In practice, a VA seller can cover all of a buyer’s standard closing costs and still contribute an additional 4% toward funding fees and other concessions.
USDA
The USDA Single Family Housing Guaranteed Loan Program caps seller and other interested-party contributions at 6% of the sales price. The funds can cover closing costs and prepaid items, but not personal debts and not personal property like furniture or electronics. Real estate commission the seller pays on the buyer’s behalf and any repair escrows are excluded from the 6% calculation.6USDA. HB-1-3555 Chapter 6 – Loan Purposes
The Ceiling No Program Lifts
Whatever your loan type, the credit can never exceed your actual closing costs. Negotiate a 6% concession on a $200,000 home for $12,000, and if your closing costs total $9,500, the credit stops at $9,500.4Fannie Mae. Interested Party Contributions (IPCs) The leftover can sometimes be redirected to discount points. It cannot come to you as cash.
The Price Bump and What It Really Costs
Most seller assist deals raise the purchase price so the seller nets the same amount. A home listed at $300,000 with a $9,000 concession request typically gets written up at $309,000 with a $9,000 credit. Your closing costs get financed into the mortgage instead of paid upfront.
You are also borrowing more. On a 30-year mortgage at 7%, adding $9,000 to the loan tacks on roughly $21,500 in total interest over the life of the loan and about $60 to the monthly payment. If cash at closing is the real constraint, that trade-off is often worth it. If you have the money on hand, paying your own closing costs and negotiating a lower price will usually save more over time.
The higher price also has to appraise. If the contract reads $309,000 and the appraiser values the home at $300,000, the lender will not lend against the higher figure, and the deal has to be renegotiated or it falls apart.
Requesting Seller Assist
Start With Real Numbers
Get a Loan Estimate from your lender before negotiating. TILA-RESPA rules require lenders to deliver the standardized form within three business days of your application.7Consumer Financial Protection Bureau. TILA-RESPA Integrated Disclosures (TRID) It itemizes every projected cost, so the concession you ask for matches what you actually need. Ask for too little and you close short; ask for too much and the excess vanishes.
Then check whether the home can carry a higher contract price. Recent comparable sales, reviewed with your agent, tell you if there is room to build the concession into a raised offer. If the list price already sits at the top of the comp range, you will have to negotiate the credit out of the seller’s existing proceeds instead.
Put It in the Contract
The concession goes into the purchase agreement or an addendum, worded either as a fixed dollar amount (“seller to credit buyer $8,000 at closing”) or a percentage (“seller to credit buyer 3% of the purchase price toward closing costs”). Underwriting will hold both sides to the exact wording, so precision matters. From there, the lender verifies the concession fits within the program cap and orders the appraisal.
If the Appraisal Comes In Low
A low appraisal is the most common way a seller assist deal gets stuck. If the appraised value lands below the contract price, the lender will not finance at the higher amount. You generally have three moves: ask the seller to lower the price to the appraisal (which may cut into the concession), bring cash to bridge the gap, or walk if your contract carried an appraisal contingency.
A middle path sometimes works. Keep the concession but reduce the base price so the total contract price matches the appraisal. A $309,000 deal with a $9,000 credit, appraising at $305,000, can be rewritten at $305,000 with a $5,000 credit. The seller nets less, and whether they accept depends on how motivated they are.
Market Conditions Change the Answer
Seller assist is a negotiation, and the market decides your leverage. In a buyer’s market with rising inventory and homes sitting longer, sellers expect concession requests and often agree because the alternative is waiting for another buyer. In a competitive seller’s market, the same request can knock your offer out of contention when a clean offer at the same price is sitting next to it. If closing-cost help is essential in a hot market, a smaller concession request or a lender credit (where the lender absorbs some costs in exchange for a slightly higher rate) may serve you better without asking the seller for anything.
Tax Treatment
A seller assist credit is not taxable income to the buyer. The IRS treats it as a reduction in the home’s purchase price, which lowers your cost basis. That means a slightly larger taxable gain if you eventually sell at a profit, though the home sale exclusion of $250,000 for single filers and $500,000 for married couples filing jointly shelters most homeowners from any real tax consequence.8Internal Revenue Service. Down Payment Assistance Programs – Assistance Generally Not Included in Homebuyers Income
For the seller, concessions count as selling expenses. The IRS subtracts them from the sale price to calculate the “amount realized,” reducing any capital gain on the sale.9Internal Revenue Service. Publication 523 (2025), Selling Your Home Mortgage points or loan charges the seller pays that would normally have been the buyer’s responsibility also qualify.