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Seller Concession Limits

The real estate market is shifting. In some areas of the country, it has flipped to a strong buyer’s market. Sellers challenged by this change are looking for creative ways to attract buyers. In addition, buyers suddenly in the driver’s seat are asking for more concessions from sellers than ever before.

Seller concessions are a useful tool in real estate. Used correctly, it can benefit both buyer and seller. For example, concessions can be offered in lieu of seller repairs or upgrades, saving out-of-pocket cash in an uncertain market. Buyers can also benefit from “financing” some of their own out-of-pocket costs for specified fees and charges.

However, there are limits to what the lender will accept for seller concessions and understanding this ahead of time can save time and frustration. Here is a snapshot of the most common loan types and concessions possibly allowed (always check with your lender).

Conventional (Fannie Mae/Freddie Mac):

  • 25% down payment – 9% concessions
  • 10-25% down payment – 6% concessions
  • <10% down payment – 3% concessions


  • 6% maximum concession


  • 4% closing costs concession


  • USDA allows the seller to pay all the closing costs and prepaid for the buyer with no percentage limit. Other restrictions and considerations apply, so speak with your lender.

Seller concessions are a great way to save cash on both sides. Used properly, it can be a great tool to put real estate transactions together in a challenging market.

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