Seller Concessions and Lender Credits: How Buyers Get Help With Closing Costs

Two Ways to Bring Less Cash to Closing

If closing costs are stretching your budget, two of the most common tools are seller concessions and lender credits. Both reduce the cash you bring to settlement, but they work very differently and come with different tradeoffs.

This guide is part of my overview of buyer closing costs in Virginia.

What a Seller Concession Is

A seller concession, sometimes called seller-paid closing costs or seller assist, is an amount the seller agrees in the contract to put toward your closing costs and prepaids. It's credited to you at settlement.

In Hampton Roads, concession requests are a normal part of many offers, particularly with VA and FHA financing. Whether a seller agrees depends on the market, the home and how the rest of your offer looks.

How Concessions Affect Price

Sometimes buyers offer a slightly higher price in exchange for a concession, effectively financing some closing costs into the loan. That only works if the home appraises at the higher price, so it's something we'd discuss carefully using recent sales.

From the seller's side, what matters is net. A $5,000 concession on a $340,000 offer nets the seller about the same as a $335,000 offer with no concession. Understanding that helps us write offers sellers can say yes to.

Concession Limits by Loan Type

Every loan program caps how much a seller can contribute, and the cap can depend on the loan type, your down payment and what the money is used for. VA, FHA, USDA and conventional loans each have their own rules. Concessions also can't exceed your actual closing costs and prepaids, so a credit larger than your costs may go unused.

Because these limits change and depend on your file, your lender is the right person to confirm exactly how much you can accept. My guide to seller concession limits by loan type lays out the commonly cited caps side by side, and if you're wondering how concessions relate to your fees, see is a seller concession the same as closing costs?

What a Lender Credit Is

A lender credit is money the lender applies toward your closing costs, usually in exchange for a slightly higher interest rate. It's the opposite of paying discount points, where you pay more upfront to get a lower rate.

Lender credits can make sense if you're short on cash now, expect to sell or refinance within a few years, or want to keep money in reserve. The tradeoff is a higher monthly payment for as long as you keep the loan.

Concessions vs. Lender Credits at a Glance

Here's how the two compare in general terms.

Using Them in a Competitive Market

When several buyers want the same home, a big concession request can make your offer less attractive. In that situation, a lender credit, assistance program or slightly smaller request might keep you competitive. In slower markets or on homes that have sat, concessions are often easier to get. I'll read the situation and advise you on what to ask for.

Next Steps

See how much cash you'll need to close and other ways to lower your closing costs. Use my mortgage calculator to see how a slightly higher rate changes your payment.

I work with several trusted local lenders who can show you rate and credit options side by side. Reach out to me, and as your buyer's agent, I'll build the right request into your offer.

This article is general information, not legal or financial advice. Closing costs vary by loan, lender, price and contract, so get exact figures from your lender's Loan Estimate and your title company or closing attorney.