How Much Can a Seller Pay Towards Buyer’s Closing Costs? (Updated)

How Much Can a Seller Pay Toward a Buyer’s Closing Costs? (Updated for 2026)

One of the most common questions I’m asked by homebuyers — especially first-time buyers — is:

“Can the seller help pay my closing costs?”

The short answer is yes — but how much depends on the type of loan and the terms of the purchase contract.

Let’s break this down clearly.

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What are Seller-Paid Closing Costs?

Seller-paid closing costs are sometimes called:

• Seller concessions
• Interested party contributions
• Seller credits

These are funds negotiated in the purchase agreement that the seller agrees to contribute toward the buyer’s allowable closing costs.

This can reduce how much cash the buyer needs at closing.

Seller credits or contributions are different than a sales concession, such as an expensive item left for the seller for the buyer.

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Why Would a Seller Agree to Pay Closing Costs?

There are several reasons this happens:

• The home has been on the market for a while
• The seller wants to attract more buyers
• The buyer offered full price and asked for concessions
• It’s a slower market
• The home needs updates and seller credits are easier than repairs

In more competitive markets, concessions may be less common — but they still happen.

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How Much Can a Seller Contribute?

This depends primarily on the loan program and sometimes the buyer’s down payment.

Here’s a general breakdown:

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 Conventional Loans

Seller contribution limits vary based on down payment and occupancy type.

For primary residences and second homes:

• 90.01% to 97% loan to value = up to 3% allowable credit
• 75.01% to 90% loan to value = up to 6% allowable credit
• 75% or less is up to 9% allowable seller credit.

Investment properties allow up to 2% seller credit.

It’s important to note that if the seller credit is not completely used, it may be refunded back to the seller. Lenders may be able to use extra funds to buy down the rates – it’s important that your real estate agent works directly with your lender to make sure that the appropriate amount of credit is requested based on current mortgage rates.

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FHA Loans

FHA allows sellers to contribute up to 6% of the sales price toward buyer closing costs up to a certain percentage of the purchase price.

This can include:

• Prepaid items
• Loan fees
• Discount points
• Other allowable closing costs

FHA tends to be more flexible than many buyers realize.

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VA Loans

VA loans allow seller concessions as well, but the structure is slightly different.

VA allows for up to 4%, which can also go towards paying off debts.

Certain fees and prepaid costs may be covered, and additional concessions are capped at specific limits.

This is an area where clarity matters — especially when writing the purchase agreement.

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What Can Seller Contributions Be Used For?

Typically, seller credits can help pay:

• Lender fees
• Title and escrow fees
• Prepaid property taxes
• Prepaid homeowners insurance
• Discount points (to lower the interest rate)

They cannot be used for:

• The down payment (with most loan types)
• Cash back to the buyer beyond actual closing costs

Any seller contribution must align with loan guidelines and documented costs.

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Do Seller Contributions Increase the Purchase Price?

Sometimes buyers structure offers slightly higher to include seller credits.

The net to the seller may still be close to their desired price.

However, the home must appraise at the agreed-upon value.

This is where strategy and communication matter. I have tools that can help evaluate offering over the list price and how long it may take to break-even.

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Are Seller Credits Common in Washington?

Seller contributions ebb and flow with the market.

In strong seller markets:

• Credits are less common
• Buyers compete with cleaner offers

In balanced or slower markets:

• Seller concessions are more negotiable

If you’re buying in Washington State, your local market conditions will influence what’s realistic.

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Should You Ask for Seller-Paid Closing Costs?

It depends on:

• Your cash position
• The competitiveness of the market
• The strength of your offer
• The property condition
• Your loan type

Sometimes using your own funds for closing costs and asking the seller for repairs is the better strategy.

Other times, seller concessions can make the difference between moving forward or not.

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Frequently Asked Questions

Can seller credits reduce my interest rate?
Yes. In many cases, seller contributions can be used to pay discount points to reduce your rate.

Can I receive cash back at closing from seller concessions?
No. Seller credits can only cover actual allowable closing costs.

Do seller credits affect the appraisal?
The home must appraise for the full purchase price. The appraiser does not subtract concessions from value.

Are seller credits taxed?
Tax treatment can vary. Always consult a tax professional regarding your specific situation.

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Final Thoughts

Seller-paid closing costs can be a helpful tool — especially for buyers trying to preserve cash.

The key is understanding:

• Loan limits
• Market conditions
• Offer strategy
• Appraisal implications

If you’re considering buying and want to know what’s realistic for your situation, I’m happy to walk through the numbers and help you structure a strategy that works.

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This article is for educational purposes only. Loan program limits and guidelines may change. Individual eligibility varies.

Questions or thinking about buying a home? Let’s connect!