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Jason Factor

Jason Factor

Senior Loan Officer
Movement Mortgage
NMLS ID # 1401985
78 Blanchard Rd, Ste 102, Burlington, MA 01803
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Seller concessions: What you need to know when buying a home

By: Movement Team
March 29, 2024

In the ever-changing world of real estate transactions, the concept of seller concessions is gaining a lot of focus from agents and buyers. Understanding these concessions is essential for making informed homebuying decisions.

What are Seller Concessions?

Simply put, seller concessions refer to items that the seller agrees to pay for on behalf of the buyer during the closing process. They are a crucial aspect of homebuying negotiations, and if used correctly, can create a win-win scenario for both the homebuyer and seller. Typically, these concessions are negotiated between the buyer’s agent and seller’s agent.

Some of the most common seller concessions can include:

  • Appraisal fees
  • Title search fees
  • Loan origination fees
  • Inspection fees
  • Homeowner association fees
  • Real estate taxes

Why are Seller Concessions Used?

The way seller concessions are used may depend on whether or not you're in a buyer's market (where supply exceeds demand) or seller's market (where demand is high). The following scenarios are the most common reasons seller concessions are made:
  • Attracting Buyers: Offering concessions makes a property more appealing to potential buyers. In a competitive market, sellers can gain an edge by helping buyers with closing costs or other expenses.
  • Affordability for Buyers: Purchasing a home involves various costs beyond the sale price. By covering part of the buyer’s closing costs, sellers can make homeownership more attainable especially for first-time buyers.
  • Closing the Deal: Sometimes, a buyer’s financial situation may be tight, and they need assistance to close the transaction. Seller concessions bridge this gap, allowing the deal to move forward.

Seller Concession Requirements for Common Mortgage Programs

Each loan program has its own rules regarding how much a seller can contribute toward the homebuyer’s expenses. Listed below is a simple outline of seller concession requirements for four of the most commonly used loan programs.

Conventional Loan Seller Concessions:

Conventional loans are typically well-suited for borrowers with established credit and higher credit scores. Conventional mortgages make up the majority of home loans in the United States, so the seller concessions for this loan type will typically be the most common.

Eligible Seller Concession Items

  • Customary closing costs
  • 30 days of mortgage interest
  • Permanent and temporary interest rate buydowns
  • Up to 12 months HOA dues
Property Type Down Payment Amount Max Seller Contribution
Primary & Secondary Homes <10% 3% of purchase price
10% - 25% 6% of purchase price
25%> 9% of purchase price
Investment 15%> 2% of purchase price


FHA Loan Seller Concessions:

An FHA loan is often a good option for first-time homebuyers who have limited credit history and limited down payment funds. The seller concession requirements for this program are as follows:

Eligible Seller Concession Items

Sellers are permitted to contribute to the following buyer expenses:

  • Customary closing costs
  • Upfront mortgage insurance premium
  • Mortgage protection insurance
  • Mortgage interest for fixed mortgages
  • Permanent/temporary interest rate buydowns
Property Type Down Payment Amount Max Seller Contribution
Primary 3.5%> 6% of purchase price
Secondary (restrictive - must meet FHA guidelines) 15%>


VA Loan Seller Concessions:

VA Loans, with no down payment requirement and competitive interest rates, can be a wonderful option for eligible veterans, service members, and surviving spouses.

Eligible Seller Concession Items

Sellers are allowed to contribute to the VA buyer’s following expenses:

  • Customary closing costs
  • Prepaids and non customary fees:
    • Taxes and insurance
    • All or a portion of the VA funding fee
    • Could help with debt payments and/or down payment
Property Type Down Payment Amount Max Seller Contribution
Primary Not required 100% customary closing costs
4% of prepaids and non-customary fees

USDA Loans:

USDA loans encourage rural development with no down payment requirements and competitive interest rates.

Eligible Seller Concession Items

Sellers are allowed to contribute to the VA buyer’s following expenses:

  • Customary closing costs
  • All/portion of upfront guarantee fee

Permanent and temporary rate buydowns

Property Type Down Payment Amount Max Seller Contribution
Primary Not required 6% of purchase price

Have Questions? Get in touch

By leveraging seller concessions wisely, you can create a harmonious transaction that benefits everyone involved. If you have any questions about seller concessions, loan programs or any other information about homebuying, reach out to your Movement loan officer.

*Qualification is required. Items eligible to be covered by seller concessions are determined by the applicable agency’s program guide. Please speak to your Movement loan officer for more details.100% of customary closing costs may be paid by the seller, lender, or any other party.

**Movement Mortgage is not affiliated, endorsed, or sponsored by the Department of Veterans Affairs, Federal Housing Administration, USDA or any government agency.

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Author: Movement Team

About Movement Mortgage
Movement Mortgage exists to love and value people by leading a Movement of Change in its industry, corporate culture, and communities. Funding approximately $30 billion in residential mortgages annually, Movement is the sixth-largest retail mortgage lender in the U.S. Movement is best known for its innovative mortgage process and referable experience, which begins with Upfront Underwriting and a seven-day loan processing goal. The company employs more than 4,000 people, has more than 650 branches in the U.S. and is licensed in 50 states. After funding its balance sheet and investing in future growth, Movement's profits are paid to its primary shareholder, the nonprofit Movement Foundation. To date, Movement Foundation has received more than $360 million of Movement profit to invest in schools, affordable housing, communities, and global outreach. For more information, visit www.movement.com.

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Jason Factor
Jason Factor
Senior Loan Officer
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78 Blanchard Rd, Ste 102, Burlington, MA 01803
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NMLS # 1401985

State License #FL-LO109618, MA-MLO1401985, ME, NH, RI