WTF is a Seller’s Concession?
A seller’s concession (a/k/a seller’s assist or seller’s credit) is a credit to the buyer to cover the cost of the transaction. It can only be used for closing costs. Unfortunately, the credit cannot be used for down payment.
It will save you money buying a home. And in a cooling market, you should ask for the most you can get.
There is a maximum the seller can credit you when you buy a house. The maximum is 6% of the purchase price of the home if you are putting down more than 10% and 3% when you are putting down less than 10% for conventional financing. For FHA, the maximum is 6%. If you seek a VA mortgage, the maximum is 4%.
Maximum Seller’s Concessions per product:
Conventional —
Loan to Value greater than 90% = 3%,
Loan to Value 90% or less = 6%
FHA — 6%
VA — 4%
A seller’s concession or credit can save you more money than negotiating a lower purchase price in most cases.
Let’s run the numbers to see how that can be.
Using the CFPB’s sample Loan Estimate linked here, I’ll break down the differences between negotiating a lower purchase price or negotiating a seller’s concession.
The details of the transaction are:
Purchase Price — $180,000
Mortgage Loan Amount — $162,000
Loan to Value — 90%
Down Payment — $18,000
Down Payment…
