Transparent method
The formula
Worked example
Example inputs
How to interpret the result
A negotiated seller credit is only usable up to whatever cap the loan program allows and up to the buyer's actual eligible closing costs. Negotiating a credit larger than either limit doesn't create extra cash for the buyer; it just leaves value on the table that the deal structure can't actually deliver.
Before you rely on it
What to check
Confirm both the loan program's concession cap and the buyer's actual eligible closing costs before finalizing a negotiated credit amount.
The common error
Where people go wrong with seller concession calculator
Negotiating a seller credit larger than what the loan program cap or the buyer's actual closing costs can use. The excess doesn't convert to cash for the buyer; it simply goes unused.
Sensitivity evidence
How purchase price changes the usable seller concession
| Purchase price | Usable seller concession | Buyer costs remaining |
|---|---|---|
| $340,000 | $10,200 | $800 |
| $382,500 | $11,000 | $0.00 |
| $425,000worked example | $11,000 | $0.00 |
| $467,500 | $11,000 | $0.00 |
| $510,000 | $11,000 | $0.00 |
Every input, tested
Which input moves the usable seller concession most
| Input | Tested from | To | Usable seller concession at each end | Swing |
|---|---|---|---|---|
| Concession cap | 2.0% | 4.0% | $8,500 to $11,000 | $2,500 (23%) |
| Eligible closing costs | $9,900 | $12,100 | $9,900 to $12,100 | $2,200 (20%) |
| Purchase price | $382,500 | $467,500 | $11,000 to $11,000 | none |
Two variables at once
Usable seller concession by purchase price and eligible closing costs
| Purchase price \ Eligible closing costs | $8,800 | $11,000 | $13,200 |
|---|---|---|---|
| $340,000 | $8,800 | $10,200 | $10,200 |
| $382,500 | $8,800 | $11,000 | $11,475 |
| $425,000 | $8,800 | $11,000 | $12,750 |
| $467,500 | $8,800 | $11,000 | $13,200 |
| $510,000 | $8,800 | $11,000 | $13,200 |
Step by step
The worked example, input by input
| Input | Value used |
|---|---|
| Purchase price | $425,000 |
| Concession cap | 3.0% |
| Eligible closing costs | $11,000 |
| Usable seller concession | $11,000 |
| Buyer costs remaining | $0.00 |
Where the inputs come from
Purchase price comes from the contract. The concession cap depends on the loan type and down payment: conventional loans commonly allow 3%, 6% or 9% of the price depending on how much you put down, FHA typically allows up to 6%, and VA allows up to 4% for concessions beyond ordinary closing costs. Eligible closing costs are the buyer's actual costs the seller may pay, from the Loan Estimate.
When the result stops applying
Concessions cannot exceed actual costs and cannot be applied to the down payment. The appraisal treats them as adjustments, and if the price is raised to cover them the appraised value may not support it. Lender and loan-type rules differ, so confirm the limit with your lender.
What to compare it with
Concessions work best in a market where sellers are motivated or when a home has been listed for a while. Ask your agent what concessions are typical locally, and compare a concession with the alternative of a price reduction using the mortgage payment calculator. Check the loan-type limits before asking, since asking above the cap wastes negotiating room. The closing cost calculator helps you know the total costs you are trying to cover.
People also ask
Frequently asked questions
Can seller concessions pay the down payment?
No. Seller concessions may cover the buyer's closing costs and prepaid items such as taxes and insurance, but lenders do not allow them to fund the down payment itself, because the down payment must come from the buyer's own or gifted money.
Is a concession better than a lower price?
It depends on the buyer's cash. A lower price reduces the loan and interest for the whole term, while a concession only reduces cash at closing.
Who sets the limit?
The loan program sets the limit, not the seller or the agent. Conventional, FHA, VA and USDA loans each publish their own caps, and the appraisal and underwriter check that the concession does not exceed the buyer's actual costs.