DoorlarkThe limits by loan type
| Loan | Most the seller can credit | Percentage of |
|---|---|---|
| Conventional (Fannie Mae), primary or second home, LTV over 90% | 3% | Lower of price or appraised value |
| Conventional, LTV 75.01% to 90% | 6% | Lower of price or appraised value |
| Conventional, LTV 75% or less | 9% | Lower of price or appraised value |
| Conventional, investment property | 2% | Lower of price or appraised value |
| FHA | 6% | Sales price |
| VA | 4%, on concession items only | VA reasonable value |
| USDA | 6% | Sales price |
On every program, a credit can't be more than the buyer's actual closing costs and prepaids, and it can't pay the down payment. Lenders can be stricter than the agency rules, so treat this table as the ceiling, not a promise. USDA leaves some seller-paid items out of its 6%, such as certain lender closing costs and repair funds held in escrow. This calculator applies 6% to the whole credit, which is the cautious reading, so ask the lender what counts.
VA works differently, and it's where offers go wrong
VA doesn't limit what a seller pays toward the veteran's normal closing costs or market-rate discount points. The 4% limit covers only what VA calls concessions: paying the VA funding fee, prepaying property taxes and insurance, buydowns beyond market-rate points, paying off the buyer's debts, and gifts. A $12,000 credit on a $300,000 VA purchase can be fine if all of it goes to title, appraisal and origination fees. It's over the limit if $13,000 of it covers the funding fee and a buydown. Enter the concession-item part separately in the calculator.
Worked example (the default numbers)
| $400,000 conventional purchase, 5% down | 95% LTV |
| Limit: 3% of $400,000 | $12,000 |
| Buyer's closing costs and prepaids | $11,000 |
| Seller credit requested | $15,000 |
| Credit the loan allows (the lowest of the three) | $11,000 |
| Excess treated as a sales concession | $4,000 |
The fix before the offer goes in: ask for $11,000 in credits and take the other $4,000 off the price. The buyer gets the same help and the loan still works.
Credit or price cut: how to explain it
On the example loan at 6.5%, a $15,000 price cut lowers the loan by $14,250 and the monthly payment by about $90, and saves $750 on the down payment. A $15,000 credit, if all of it fits, cuts cash to close by $15,000 on day one but leaves the payment the same. Buyers short on cash usually do better with the credit. Buyers who have the cash and plan to stay for years may prefer the lower price. The calculator shows both. A credit also keeps the recorded sale price higher, which sellers and listing agents notice because later comps use it.
Talk tracks
To your buyer:
"Your loan lets the seller cover up to [limit] of your closing costs, and your estimate shows [closing costs]. Asking for more than that won't put more money in your pocket. The lender just treats the extra as a lower price. So let's ask for [allowed amount] in credits and put the rest into the price."
To your seller, when a buyer asks for a credit:
"A [amount] credit and a [amount] price cut cost you about the same at closing. The credit keeps the recorded price at [price], which matters for the next comps in the neighborhood. I'll confirm the buyer's lender has approved the amount before we agree to it."
Repair credits count too. A credit for inspection repairs goes under the same limit as closing-cost help. If the offer already asked for the maximum, there's no room for a repair credit later. See the repair request letter templates for other options.
General information, not lending or legal advice. Agency rules change and lenders add their own overlays, so confirm the limit with the buyer's loan officer before you write the offer. Doorlark isn't affiliated with Fannie Mae, HUD, VA or USDA.
Sources
- Fannie Mae Selling Guide B3-4.1-02, Interested Party Contributions
- HUD Handbook 4000.1, FHA Single Family Housing Policy (interested party contributions, 6%)
- VA, Funding fee and closing costs (4% concession limit)
- VA Lender training: borrower fees, charges and seller concessions
- USDA Rural Development HB-1-3555, Chapter 6 (seller concessions, 6%)
Checked Oct 26, 2026.
Related free tools and guides
- Seller Net Sheet Calculator: estimate what a seller walks away with, line by line.
- Repair request letter templates: six letters for repairs, credits and proof of repairs.
- Price Reduction Calculator: compare a price cut with what another month on the market costs the seller.
- Commission Split Calculator: your take-home on one deal after referral fee, brokerage split, cap and fees.
FAQ
How much can a seller pay in concessions?
It depends on the loan. Conventional loans allow 3%, 6% or 9% of the lower of price or appraised value, depending on loan-to-value, and 2% on investment property. FHA and USDA allow 6% of the sales price. VA limits concessions to 4% of reasonable value but doesn't count normal closing costs or market-rate points toward it.
What happens if the seller credit is over the limit?
The excess is generally treated as a sales concession and subtracted from the price before the lender figures the loan-to-value, which can break the loan's limits. The usual fix is to lower the credit and take the rest off the price.
Can seller concessions pay the down payment?
No. Credits can cover closing costs and prepaids, and for Fannie Mae up to 12 months of HOA dues after closing, but not the down payment or required reserves.
Can the credit be more than the buyer's closing costs?
No. A credit can't exceed the buyer's actual closing costs and prepaids, so size it to the Loan Estimate.
Is a repair credit a seller concession?
Yes. A credit for inspection repairs counts toward the same limit as closing-cost help, which is why a buyer who maxed out credits in the offer may need a price reduction or seller repairs instead.
Does Doorlark save my numbers?
No. The calculator runs in your browser and nothing is sent to us.
By Doorlark Editorial Team. For planning only, not legal, tax or financial advice.