About the Seller Concessions Calculator
This seller concessions calculator works out the most a seller (or builder or agent) can contribute toward your closing costs under the rules for your loan type, and how much that cuts the cash you need at closing. Enter the price, appraised value, down payment, your closing costs and the credit you want to ask for.
Limits applied: conventional loans follow Fannie Mae’s interested party contribution (IPC) caps — 3% of the lower of price or appraised value when the loan-to-value ratio is above 90%, 6% from 75.01% to 90%, 9% at 75% or less, and 2% for investment properties at any LTV. FHA loans allow interested parties to contribute up to 6% of the sales price toward origination fees, other closing costs, prepaid items and discount points. VA loans do not limit a seller paying the buyer’s normal closing costs, but cap other concessions — such as paying the VA funding fee, prepaid hazard insurance or paying off debts — at 4% of the home’s reasonable value.
In every case a credit cannot exceed your actual costs; anything above the cap or your costs is usually treated as a sales concession and can reduce the value used for the loan, or simply be lost. Freddie Mac loans and individual lenders can apply their own limits, so confirm with your loan officer before you write the offer.
With the default inputs, the seller credit you can use is $14,000.00. Change any value above to recalculate instantly.
How to use the seller concessions calculator
- 1Choose your loan type and, for conventional loans, the occupancy.
- 2Enter the purchase price, appraised value and down payment.
- 3Enter your estimated closing costs and prepaid items from the Loan Estimate.
- 4Enter the seller credit you plan to request.
- 5Check the usable credit and cut your request (or ask for a lower price) if part of it would be wasted.
Formula and method
For conventional loans the base value is the lower of the sales price and appraised value, and LTV = loan ÷ that value. The limit is 3% above 90% LTV, 6% from 75.01% to 90%, 9% at 75% or less, and 2% for investment properties. For FHA loans the cap is 6% of the sales price. The usable credit is the smallest of what you ask for, the cap and your actual closing costs and prepaids, because interested party contributions cannot fund the down payment.
For VA loans, a seller paying your normal closing costs is not limited; the 4% cap applies only to other concessions such as the funding fee, prepaid hazard insurance or debt payoff. The maximum is therefore your closing costs plus the lesser of those other items and 4% of reasonable value. Cash to close is the down payment plus all costs, minus the credit.
- Base value
- Lower of price or appraised value (conventional); price (FHA); reasonable value (VA)
- LTV
- Loan amount ÷ base value
- Limit%
- 2%, 3%, 6% or 9% (conventional), 6% (FHA), 4% (VA other concessions)
Worked examples
Conventional, 10% down, asking for $20,000
With 10% down the LTV is exactly 90%, so the cap is 6% of $400,000 = $24,000. But you only have $14,000 of closing costs, so only $14,000 can be credited; the other $6,000 is wasted. Cash to close falls from $54,000 to $40,000.
Conventional, 5% down, low appraisal
The loan is $332,500. Fannie Mae uses the lower appraised value of $345,000, giving an LTV of about 96.4% — above 90%, so the cap is 3% of $345,000 = $10,350. The remaining $1,650 of the request cannot be used.
FHA, 3.5% down, 6% cap
FHA allows up to 6% of the $300,000 price, or $18,000, but your costs are $15,000, so that is the most the seller can pay. Cash to close drops from $25,500 ($10,500 down + $15,000) to $10,500.
VA, zero down, seller pays costs and the funding fee
The seller can pay all $9,000 of normal closing costs without limit. The $7,525 funding fee counts as a concession but is under the 4% cap ($14,000), so the full $16,525 credit is allowed and nothing is due at closing.
Frequently asked questions
What is the maximum seller concession on a conventional loan?+
For Fannie Mae loans on a primary residence or second home, the cap is 3% of the lower of price or appraised value when LTV is above 90%, 6% from 75.01% to 90%, and 9% at 75% or less. Investment properties are capped at 2%.
How much can a seller pay on an FHA loan?+
Interested parties can contribute up to 6% of the sales price toward the buyer’s origination fees, other closing costs, prepaid items and discount points. Contributions above 6% or above actual costs are treated as an inducement to purchase.
What is the VA 4% seller concession rule?+
VA does not limit sellers paying the buyer’s normal closing costs, but other concessions — such as paying the VA funding fee, prepaid hazard insurance or paying off the buyer’s debts — cannot exceed 4% of the home’s reasonable value.
Can seller concessions be used for the down payment?+
No. Seller credits can only cover closing costs, prepaid items and similar allowable costs. Your down payment must come from your own funds, gifts or approved assistance programs.
What happens if seller concessions exceed the limit?+
The excess is usually treated as a sales concession, and the lender deducts it from the price or appraised value before calculating your loan-to-value ratio, which can reduce how much you can borrow. Agreeing a lower price avoids this.
Are seller concessions better than a lower price?+
A credit saves cash at closing, which helps if you are short on funds. A price cut lowers your loan, monthly payment and sometimes property tax. If you have the cash, a price reduction often saves more over time.
Results are estimates for educational purposes and are not financial advice. Rates, fees and terms vary — confirm with your lender or a licensed advisor before making decisions.