Quick answer: A seller concession is money the seller pays toward your closing costs or prepaid items. The limit depends on your loan. For a Fannie Mae loan on a principal residence, the cap ranges from 3 to 9 percent of the lower of the price or appraised value, depending on the loan-to-value tier. VA loans cap seller concessions at 4 percent of the home's reasonable value, and USDA's current cap is 6 percent of the sales price, with a 2026 proposal to change it. Any amount above your actual closing costs can be treated as a sales concession, which lowers the price the lender uses. Ask your lender to run the numbers before you write the offer.
Buyers in our area often ask whether the seller can pay some of the closing costs. The answer is usually yes, but the amount is capped by the loan program, and the way the credit is structured changes how the lender and the appraiser see the deal. This article explains the main caps, how a credit appears on your closing documents, and why an appraisal can matter. The examples are hypothetical, and your lender will confirm the figures for your loan.
Fannie Mae: the interested party contribution
On a conventional Fannie Mae loan, a seller's payment toward the buyer's costs is called an interested party contribution (IPC). Fannie Mae's maximum depends on loan-to-value (LTV) for a principal residence or second home. Above 90 percent LTV, the cap is 3 percent. Above 75 percent up to 90 percent, it is 6 percent. At or below 75 percent, it is 9 percent. For an investment property, the cap is 2 percent at any combined loan-to-value (Selling Guide B3-4.1-02). The percentage is measured against the lower of the sales price or the appraised value.
Fannie Mae's rules also distinguish between items. Financing concessions cover borrower closing costs, prepaid items, and up to 12 months of homeowners association assessments. If a seller's payment is larger than those costs, the excess is a sales concession. Fannie Mae deducts the sales concession from the sales price before it recalculates the loan-to-value ratio. Customary seller-paid fees are excluded from the maximum, under the same guide.
FHA: a number you may see that does not apply
You may see a 6 percent figure attached to FHA. HUD's Mortgagee Letter 2024-06, dated April 26, 2024, sets a 6 percent cap for HECM for Purchase, which is a reverse mortgage program. It is not the standard FHA cap. I did not verify the standard FHA concession limit from HUD's current handbook, so ask your lender which limit applies to your FHA loan.
VA: 4 percent of reasonable value
For VA loans, the department says it limits seller concessions to no more than 4 percent of the home's reasonable value, as shown on the VA Notice of Value. Concessions can include credits toward the VA funding fee, debt payoff, or prepaid hazard insurance, according to the VA's funding fee and closing costs page.
USDA: 6 percent, with a proposal to change it
A USDA proposed rule published in the Federal Register on April 20, 2026 describes the current limit: sellers and other interested parties may contribute a combined maximum of 6 percent of the sales price. The proposal would exclude real estate commission fees from that cap. Comments were due June 22, 2026. I did not find a final rule, so check the status with your lender before you count on a USDA concession.
What the credit looks like on your closing documents
The Loan Estimate shows seller credits in the cash-to-close calculation (12 CFR 1026.38). On the final Closing Disclosure, the seller credit appears as a lump-sum item that reduces the cash you bring to closing, shown as a negative figure. Compare the amount on both documents before closing. If the numbers don't match, ask the lender and the title company why.
Why the appraiser may adjust
Concessions can affect how an appraiser treats comparable sales. Under Fannie Mae's appraisal guidance, comparable sales with concessions must be adjusted, and positive adjustments for concessions are not acceptable. Dollar-for-dollar adjustments are used only when the market supports them. A concession that is large relative to the market can therefore create a gap between the price and the value the lender uses (Selling Guide B4-1.3-09). This is one reason to ask your lender about the concession before you finalize the offer.
Florida's deed tax
The deed documentary stamp tax in Florida is 70 cents per $100 of consideration (s. 201.02(1)(a)). Who pays it is set by the contract and by local custom, and it is a negotiated item. Ask your attorney or title agent what the contract says and how the closing statement will show it.
Example math, hypothetical
Suppose a Fannie Mae loan on a principal residence is 80 percent LTV, with a $400,000 price and appraisal. The cap is 6 percent, or $24,000. If the seller gives $24,000 and your closing costs are $9,000, the $15,000 excess is a sales concession. Deducting it lowers the value used for the loan to $385,000. A $320,000 loan on that value is about 83.1 percent LTV, which remains in the 6 percent tier. If the appraisal comes in at $380,000 instead, the lower value controls, and the 6 percent cap is $22,800, not $24,000. For a VA loan with a reasonable value of $350,000, the 4 percent cap is $14,000. For a USDA loan on a $300,000 sales price, the 6 percent cap under the current rule is $18,000. These figures are illustrations, not quotes.
Advertising and claims
I do not market a home as having "zero closing costs" or a guaranteed seller credit unless the contract and the lender's documents support it. Florida prohibits false or misleading real estate advertising (s. 475.25). Local MLS rules control what can appear in listing remarks about concessions, and I have not verified the St. Lucie or Palm Beach rules for that.
What to ask your lender before you offer
Ask which cap applies to your loan, whether the concession is a financing concession or a sales concession, how it will appear on the Loan Estimate and the Closing Disclosure, and whether the appraisal is likely to be affected. Those four answers will tell you more about your real cash to close than a headline percentage.
Questions buyers ask about seller concessions
What is the most a seller can pay on a conventional loan?
For a Fannie Mae principal residence, the cap is 9 percent at or below 75 percent LTV, 6 percent above 75 to 90 percent, and 3 percent above 90 percent. For an investment property, it is 2 percent. The percentage is measured against the lower of the price or the appraised value.
Is a seller credit the same as a price reduction?
Not for lender math. Fannie Mae deducts sales concessions from the sales price before recalculating loan-to-value, so a large credit can reduce the value the lender uses. Ask your lender how it will treat your specific credit.
Where does the credit appear at closing?
On the Loan Estimate, under the cash-to-close calculation as seller credits, and on the final Closing Disclosure as a negative lump-sum seller credit (12 CFR 1026.38). Check that the amount matches on both.
What is the VA cap on seller concessions?
The VA limits seller concessions to 4 percent of the home's reasonable value, as shown on the Notice of Value. Confirm the figure with your lender and the VA documents for your loan.
What is the USDA cap?
The current USDA rule, as described in a 2026 proposed rule, sets a combined maximum of 6 percent of the sales price. The proposal would exclude commissions. I did not find a final rule, so confirm the status with your lender.
Talk with William. Want to know what a seller can contribute on your loan and how it changes your cash to close? Send me the listing and your budget. I will help you list the questions for your lender before you make an offer. Call or text (772) 800-2274 or send a message.
General information, not lending, legal, tax or financial advice. Concession limits are set by loan programs and lenders and change; examples are hypothetical. Confirm figures with a licensed mortgage loan originator and your attorney or title agent. Statute, regulation and program references are as reviewed on October 20, 2026. William Merchant, REALTOR®, RE/MAX Gold. Each RE/MAX office is independently owned and operated. Equal Housing Opportunity.
Sources
- Fannie Mae Selling Guide B3-4.1-02: Interested party contributions
- Fannie Mae Selling Guide B4-1.3-09: Adjustments to comparable sales
- HUD Mortgagee Letter 2024-06 (April 26, 2024): HECM for Purchase concession limits
- VA: Funding fee and closing costs (seller concessions)
- Federal Register: USDA single family housing guaranteed loan program, limited party concessions (proposed rule, April 20, 2026)
- 12 CFR 1026.38, Closing disclosure requirements
- Florida Statutes 201.02, Documentary stamp tax on deeds (2025)
- Florida Statutes 475.25, Discipline of real estate licensees (2025)
