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Seller Concession Limits

The real estate market is experiencing significant shifts. In some regions, it has transitioned to a pronounced buyer’s market. Faced with this change, sellers are exploring innovative strategies to attract buyers. Meanwhile, empowered buyers are seeking more concessions from sellers than in the past.

Seller concessions are an effective tool in real estate transactions. When applied strategically, they can provide advantages to both parties. For instance, concessions might be used instead of seller-funded repairs or upgrades, which can reduce cash expenditures in a fluctuating market. Conversely, buyers can benefit by effectively financing some of their own costs for specific fees and charges.

However, it’s important to recognize that lenders have limits on acceptable seller concessions. Understanding these limits beforehand can prevent delays and reduce frustration. Below is an overview of the most common loan types and their potential concessions (though it’s essential to verify with your lender):

Conventional (Fannie Mae/Freddie Mac):

  • 25% down payment – up to 9% in concessions
  • 10-25% down payment – up to 6% in concessions
  • Less than 10% down payment – up to 3% in concessions


  • Maximum of 6% in concessions


  • Maximum of 4% in concessions


  • 25% down payment – up to 9% in concessions

Notably, USDA loans permit sellers to cover all closing costs and prepaids for the buyer without a specific percentage limit. However, other restrictions and considerations are in play, so consulting with your lender is advised.

Seller concessions can be a valuable asset for conserving cash for both buyers and sellers. Utilized effectively, they can facilitate successful real estate deals in a challenging market.

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