Seller Paid Closing Costs Explained

Introduction

Seller-paid closing costs (seller concessions) are when the seller agrees to pay a portion of the buyer's closing costs. The amount is negotiated in the purchase agreement and limited by loan program rules. See Who Pays Closing Costs and What Are Closing Costs.

Frequently Asked Questions

What are seller-paid closing costs?

Seller-paid closing costs (seller concessions) are when the seller agrees to pay a portion of the buyer's closing costs. The amount is typically negotiated in the purchase agreement and limited by loan program rules.

How much can the seller pay?

FHA typically allows up to 6% of the sale price. Conventional limits vary by down payment (often 3%–9%). VA may allow more. The lender must verify the sale price supports the concession.

Do seller concessions affect the sale price?

Seller concessions reduce the buyer's cash to close but do not change the sale price. The appraised value must support the purchase price.

When do sellers agree to pay closing costs?

Sellers may agree in slower markets, when the buyer is short on cash, or when it helps close the deal. It can be a negotiating point.