Getting the Seller to Pay Some of Your Closing Costs

What seller concessions are and when you can ask for them

A seller concession is an agreement where the seller pays some or all of your closing costs instead of you paying them out of pocket at closing. The seller writes a check to the title company or your lender, and that money reduces what you owe. You do not negotiate this after you own the house — you propose it before you make an offer, as part of the offer itself.

Seller concessions work because the seller has already decided to sell. If your offer includes a request for concessions and the price is otherwise competitive, many sellers will agree rather than wait for another buyer. The trade-off is straightforward: you are asking the seller to lower their net proceeds in exchange for a smoother, faster closing.

Lenders allow concessions up to a limit that depends on your loan type and down payment. Conventional loans typically allow 3 percent of the purchase price in concessions if you put down 20 percent or more, and up to 6 percent if you put down less. FHA loans allow up to 6 percent. VA loans allow up to 4 percent. Your lender will tell you the exact cap for your situation once you are pre-approved.

Key Takeaways

• Seller concessions are written into your offer before you make it, not negotiated after the fact.
• Your lender sets a maximum concession amount based on your loan type and down payment, usually between 3 and 6 percent of the purchase price.
• Concessions reduce the seller's net proceeds, so they are more likely to agree in a buyer's market or if your offer is otherwise strong.
• The seller pays the title company or lender directly; the money never passes through your hands.
• Asking for concessions may weaken your offer in a competitive market, so your real estate agent should advise you on local conditions before you include them.

How to include concessions in your offer

Your real estate agent writes the concession request into the purchase agreement under a section usually called "Seller Concessions" or "Seller Closing Cost Assistance." You specify a dollar amount or a percentage of the purchase price. For example: "Seller to provide $8,000 in closing cost assistance" or "Seller to provide 4 percent of purchase price toward buyer's closing costs."

The concession request goes in the offer itself, not in a separate conversation. Once the seller receives your offer, they can accept it as written, reject it, or counter with a different concession amount. If they counter with less than you asked for, you then decide whether to accept that counter, propose a different amount, or walk away.

Timing matters. In a seller's market — when there are more buyers than houses — sellers are less likely to agree to concessions because they have other offers to choose from. In a buyer's market, or when a house has been listed for a long time, concessions are easier to negotiate. Your agent knows the local market and should tell you whether asking for concessions will hurt your chances of your offer being accepted.

What closing costs the seller can cover

Seller concessions can pay for most of your closing costs, but not all. The seller can typically cover loan origination fees, appraisal fees, credit report fees, title insurance, title search, homeowners insurance, property taxes, HOA transfer fees, and recording fees. They can also cover points you buy to lower your interest rate.

The seller cannot pay for your down payment. This is a firm rule across all loan types — the down payment must come from your own funds or from a gift, never from the seller. The seller also cannot pay for inspections, surveys, or pest reports, because those are considered your due diligence costs, not closing costs.

If you are unsure whether a specific cost can be covered by a concession, ask your lender or title company before you make your offer. They can tell you exactly which line items on your Closing Disclosure are may be able to access.

How much to ask for

Start by getting an estimate of your actual closing costs from your lender. They will provide a Loan Estimate within three business days of your pre-approval, and it will list every closing cost you will owe. Add up the may be able to access costs — everything except your down payment and your own due diligence expenses. That total is the maximum you could reasonably ask the seller to cover.

In practice, asking for the maximum rarely works. Sellers expect to negotiate, and asking for 6 percent when the limit is 6 percent signals that you have done your homework and are not leaving room for discussion. A more effective approach is to ask for 3 to 4 percent of the purchase price, which covers most closing costs without looking unreasonable. If the seller counters with 2 percent, you can accept or counter back.

Remember that concessions reduce the seller's proceeds dollar-for-dollar. A $10,000 concession means the seller walks away with $10,000 less, even if the purchase price stays the same. This is why sellers are more willing to agree when they are motivated to sell quickly or when your offer is otherwise strong — a good price, a quick closing, or a large down payment can make concessions feel like a fair trade.

When concessions strengthen your offer and when they weaken it

In a buyer's market, concessions can make your offer more attractive because they show the seller you are serious and willing to close quickly. If three other buyers are offering similar prices with no concessions, asking for 3 percent in concessions signals that you have thought through the deal and are not trying to squeeze the seller.

In a seller's market, concessions can work against you. If the seller has five offers above asking price with no concessions, your offer with a concession request looks weaker, even if the total price is competitive. Your agent should advise you on this before you submit your offer. In a hot market, it is often better to offer a higher price with no concessions than a lower price with concessions.

The strength of the rest of your offer also matters. If you are putting down 20 percent, have been pre-approved, and are willing to close in two weeks, the seller is more likely to agree to concessions. If you are putting down 3 percent, are still getting pre-approved, and want a 45-day closing, the seller may see concessions as a sign that you are trying to make the deal work on your terms, not theirs.

What happens if the seller agrees to concessions

Once the seller accepts your offer with concessions, the concession amount is locked in. At closing, the title company or your lender will collect the concession check from the seller's proceeds and apply it to your closing costs. You will see this on your Closing Disclosure as a credit from the seller.

The concession reduces what you owe at closing, but it does not change your loan amount or your monthly payment. If you were borrowing $300,000 and your closing costs were $12,000, and the seller provides a $6,000 concession, you still borrow $300,000 — the concession just means you pay $6,000 less out of pocket at closing.

If the concession is larger than your closing costs, the excess goes toward reducing your loan amount or your down payment, depending on your loan type and lender rules. Some lenders will not allow excess concessions, so confirm this with your lender before you finalize your offer.

Common mistakes to avoid

Do not assume the seller will agree to concessions just because they are allowed. Many sellers view concessions as a reduction in their profit and will reject any offer that includes them, especially in a competitive market. Your agent should give you honest feedback about whether concessions are realistic in your local market before you include them in your offer.

Do not ask for concessions to cover costs that are not may be able to access. If you ask the seller to pay for an inspection or a survey, the lender will reject the offer, and you will have to renegotiate. Stick to the may be able to access costs your lender confirms in writing.

Do not confuse concessions with a price reduction. If you negotiate a lower purchase price, that is different from asking for concessions. A lower price benefits you at closing and also lowers your loan amount. Concessions only help at closing. In some cases, a lower price is better for you; in others, concessions are better. Your lender can show you the math for your specific situation.

Frequently Asked Questions

Can I ask for concessions if I am putting down less than 20 percent?

Yes. Lenders allow higher concession percentages for lower down payments — typically up to 6 percent for conventional loans with less than 20 percent down, compared to 3 percent for 20 percent down. Ask your lender what the limit is for your loan type and down payment amount.

What if the seller agrees to concessions but then tries to back out at closing?

The concession is part of the signed purchase agreement, so the seller cannot back out without breaching the contract. If the seller refuses to pay at closing, you have legal recourse through your real estate agent or attorney. This is rare — most sellers honor the agreement they signed.

Do concessions affect my interest rate or loan approval?

No. Concessions are a closing cost credit, not a change to your loan terms. Your interest rate, loan amount, and monthly payment are determined by your credit, income, and down payment, not by whether the seller is paying some of your closing costs.

Can I ask for concessions on a cash offer?

Technically yes, but it is unusual and unlikely to work. Concessions exist because lenders have rules about them. If you are paying cash, there is no lender, so the seller has no reason to agree. In a cash deal, you typically negotiate the price directly instead.

What if my closing costs end up being lower than the concession amount?

The excess concession goes toward your down payment or loan amount, depending on your lender's rules. Some lenders do not allow this, so confirm with your lender before you finalize the concession amount in your offer. If your lender does not allow excess concessions, ask the seller for a lower concession amount instead.