Quick answer
Seller concessions are costs the seller agrees to pay on the buyer’s behalf, most often closing costs and prepaid items, usually written into the contract as a seller credit. Each loan program caps them: on a Fannie Mae loan, from 3% to 9% of the price (or appraised value, if lower) for a home you’ll live in, depending on your down payment.
Key facts
3%
Fannie Mae, less than 10% down (LTV/CLTV above 90%)
Fannie Mae Selling Guide B3-4.1-02 · May 7, 2025
Limits and an example
Fannie Mae calls these interested party contributions. Its caps are 3% above 90% LTV, 6% from 75.01% to 90%, 9% at 75% or less, and 2% on an investment property. VA loans cap concessions at 4% of the home’s reasonable value, but the seller paying your normal closing costs doesn’t count toward that limit. FHA and USDA set their own caps.
On a $360,000 home with 10% down, a Fannie Mae loan allows up to $21,600; with 5% down the cap falls to $10,800.
What concessions can’t cover
Under Fannie Mae’s rules, a seller credit can’t pay your down payment or count toward reserves, and it can’t exceed your actual closing costs. Anything above the cap or your costs is treated as a price reduction, which lowers the value used for loan-to-value. Check that the seller credit on page 3 of the Closing Disclosure matches what you negotiated. For other ways to cut the bill, see how to lower closing costs.
Related terms
- Closing costs and lender credit; estimate yours with the closing cost calculator
Sources
- US Census Bureau, American Community Survey 2024 1-year — Median value of owner-occupied homes (2024 ACS 1-year)
- Fannie Mae Selling Guide B3-4.1-02 — Fannie Mae: most an interested party may pay toward closing costs, principal residence or second home, LTV/CLTV 75.01–90%; Fannie Mae: most an interested party may pay toward closing costs, principal residence or second home, LTV/CLTV above 90%; Fannie Mae: most an interested party may pay toward closing costs, principal residence or second home, LTV/CLTV 75% or less (May 7, 2025)
- U.S. Department of Veterans Affairs — VA limit on seller concessions (share of the home’s reasonable value) (Oct 28, 2026)
- CFPB: Closing Disclosure explainer (seller credits)
Last reviewed Figures are checked against the sources above. Read our editorial policy. This page is general information, not financial advice — see the disclaimer.