FHA
Up to 6% of purchase price
FHA permits the most generous concession cap. On a $300K home = up to $18K toward your closing costs. Often the easiest path to low cash-to-close.
Seller Concessions · cash from the other side
Less cash to close.
Without dropping price.
Seller concessions = the seller paying part of YOUR closing costs. Standard tool in buyer's markets. The cap depends on your loan type. Knowing the rules lets you negotiate concessions instead of price reductions — sometimes better math.
· Concession caps by loan
Each loan type.
Different ceiling.
Conventional (owner-occupied)
3-9% based on LTV
<10% down: 3% concession cap. 10-25% down: 6% cap. 25%+ down: 9% cap. Higher down payment = more concession allowed (perversely).
Conventional (investment)
2% only
Investment property loans cap concessions at 2%. Lower because Fannie/Freddie consider concessions as effectively reducing the price — and they want investors with skin in the game.
VA
Up to 4% (plus closing costs)
VA permits 4% in concessions PLUS allows seller to pay traditional closing costs separately. Veteran buyers can stack.
USDA
Up to 6%
USDA matches FHA's generous 6% cap. With USDA's 0% down + 6% concession, you can sometimes close on very little cash.
· Watch-outs
Four traps
in concession negotiations.
Pitfall 01
Asking for concessions in a hot market.
Sellers reject concession requests in multi-offer scenarios. Save the ask for buyer's markets. Sometimes a slightly lower offer + concession beats a higher offer with none.
Pitfall 02
Forgetting concessions can boost appraised value risk.
Some appraisers see concessions as effectively raising the price. If concessions push contract significantly above comparable sales, the appraisal can come low.
Pitfall 03
Not requesting them in the offer.
Concessions must be in the contract. You can't add them mid-process. Build into your offer from day one if your LO recommends.
Pitfall 04
Using them to inflate purchase price.
Seller agrees to $310K + $10K concession instead of $300K + $0. You finance more, pay more interest forever. Sometimes worth it for cash-to-close relief — sometimes not.
Concessions are negotiation leverage.
Use them right.
Five minutes. We map your concession strategy by loan type + market dynamics.