What are seller concessions?

What seller concessions mean

A seller concession is a deal term where the seller agrees to pay some costs that are usually tied to the buyer's side of the closing. The CFPB says a seller may end up paying some of these costs depending on the contract or state law.

A seller credit is the common Closing Disclosure label for a general amount the seller gives toward the buyer's closing costs. Fannie Mae uses the term 'interested party contribution' when a seller or other party with an interest in the sale contributes money toward buyer costs.

The buyer may ask for a concession because cash due at closing is a concern. The CFPB says a buyer can negotiate for a credit toward closing costs, but the seller will usually require a higher home price to cover the cost of that credit.

What seller concessions can pay for

Seller concessions often relate to closing costs and prepaid costs. The CFPB lists common closing fees or charges such as appraisal fees, tax service provider fees, title insurance, government taxes, and prepaid expenses such as property taxes, homeowners insurance, and interest until the first payment is due.

The allowed items depend on the buyer's loan program. Fannie Mae allows financing concessions for borrower closing costs, including prepaids, and for borrower homeowners' association assessments after the settlement date, limited to no more than 12 months.

Fannie Mae does not allow interested party contributions to be used for the borrower's down payment, reserve requirements, or minimum borrower contribution requirements.

How they show on the Closing Disclosure

For a financed purchase, the buyer receives a Closing Disclosure before closing. The CFPB says lenders are required to provide it three business days before the scheduled closing.

The form can show concessions in more than one place. The CFPB says the buyer should check that the Seller Credit reflects the amount agreed with the seller, and that specific seller paid costs may be listed as 'Seller Paid' line items on page 2.

Federal disclosure rules define 'Seller Credit' as a lump sum the seller provides at closing that is not otherwise itemized to pay loan costs, other costs, or other seller obligations paid directly to the consumer. The Closing Disclosure also has a 'Paid Already by or on Behalf of Borrower at Closing' section that includes rebates or credits paid by the seller or third party service providers.

Seller concession limits by loan type

Loan limits matter because a contract can say one thing while the buyer's loan rules allow something narrower. These limits are not a suggested amount. They only show the outside rules in the sources listed below.

For a loan that must meet Fannie Mae rules, the financing concession cap is based on occupancy and LTV or CLTV. Fannie Mae says the cap is calculated using the lower of the sales price or appraised value, not the loan amount.

Seller concession compared with a price cut

A concession and a price cut can lead to different results. A concession keeps the contract price in place while using seller money at closing to pay or credit allowed buyer costs. A price cut lowers the contract price instead.

For the seller, the useful comparison is net proceeds. If the price stays the same and the seller gives a credit, the credit reduces what the seller keeps from that price before loan payoff and other seller costs. If the price is reduced instead, the reduced price is the starting point for the seller's net.

For the buyer, a seller credit can reduce cash due at closing if the loan and closing statement allow it. The CFPB says the seller will usually require a higher price to cover the cost of a credit, so the buyer may not save money overall.

Loan rules can also change the simple math. Fannie Mae says financing concessions above its limits are sales concessions that must be deducted from the property's sales price. For other selling costs, see how much it costs to sell a house and selling a house with a mortgage.

Before you agree to a seller concession

Put the concession in words that match the deal. The agreement can name a general credit, name specific costs the seller will pay, or use the wording required for the buyer's loan file.

Then compare the contract, the loan rules, and the Closing Disclosure. A credit that looks simple in the offer can be limited by loan program rules before closing.

• Check whether the buyer is asking for a general Seller Credit or specific Seller Paid costs.
• Compare the amount with the buyer's actual closing costs, because Fannie Mae has rules for amounts that exceed the buyer's costs.
• Check whether the buyer's loan involves a buydown, because it can affect contribution rules.
• If you are comparing different sale paths, cash offer versus listing agent explains another way sellers compare price, costs, and certainty.

Frequently asked questions

Sources

Checked against each source on November 3, 2026. This page is general information, not legal or tax advice.

1. CFPB Ask CFPB: What fees or charges are paid when closing on a mortgage and who pays them? (Consumer Financial Protection Bureau)
2. CFPB Closing Disclosure Explainer (Consumer Financial Protection Bureau)
3. 12 CFR 1026.38 Content of disclosures for certain mortgage transactions (Consumer Financial Protection Bureau)
4. Fannie Mae Selling Guide B3-4.1-02, Interested Party Contributions (Fannie Mae)