--- title: "Seller Concessions: What They Can and Cannot Pay For" canonical: https://www.ondorealestate.com/blog/seller-concessions-what-they-cover/ --- # Seller Concessions: What They Can and Cannot Pay For A credit is negotiated in the contract but spent under program rules. [Home](/)[Learn](/learn/)First-Time BuyersFirst-Time Buyers Educational Ondo Real Estate Editorial Team·Published September 17, 2026·4 min read [← Mortgage learning hub](/learn/) ## Key takeaways - A seller concession is a credit at closing toward closing costs, prepaids, or a rate buydown. It is negotiated in the contract and spent under program rules. - It generally cannot go toward the down payment on agency financing. A buyer short there needs something else, such as documented gift funds. - Every program caps the contribution, and the cap moves with program, occupancy, and loan-to-value — so the number belongs in the offer after a loan officer confirms it, not before. - Raising the price to fund a credit changes the loan amount and still has to appraise at the higher figure. Summary only. The detail, the current figures, and the disclosures are in the article below. On this page - [What a concession is](#what-a-concession-is) - [What it can pay for](#what-it-can-pay-for) - [The cap](#the-cap) - [Credit or price reduction?](#credit-or-price-reduction) - [What happens next](#what-happens-next) Asking the seller to cover costs is one of the most common moves in a negotiation, and one of the easiest to write incorrectly. The contract can say anything the parties agree to. What actually gets paid at closing is decided by the program. Snapshot as of 2026-08. This page does not quote a cap percentage or promise a seller credit will be allowed on your file. The program guide in force and the lender reviewing the contract decide that. ## What a concession is A seller concession is money the seller credits the buyer at closing toward closing costs, prepaids, or a rate buydown. It is negotiated in the contract and shown on the closing disclosure. That is the whole mechanism — money moving from the seller's side of the settlement statement to the buyer's costs. It is not a discount applied to the loan, and it does not reduce the amount being borrowed. ## What it can pay for Closing costs, prepaids, and a rate buydown are the usual targets. Those are the lines described in [Utah closing costs](/blog/utah-closing-costs-title-origination-prepaids/) and [cash to close](/blog/utah-cash-to-close-besides-down-payment/). Concessions are often used to fund a temporary or permanent rate buydown. Whether that beats a price reduction depends on how long the buyer keeps the loan, which is a break-even question, not a rule. Not the down payment Seller concessions generally cannot be applied to the down payment on agency financing. They address closing costs, prepaids, and buydowns. A buyer short on down payment needs a different solution, such as documented gift funds. This is the single most common misunderstanding about concessions, and it surfaces late — usually when cash to close is being finalised. If the down payment is the gap, look at [gift funds](/blog/gift-funds-down-payment-rules/) instead. ## The cap Every program caps what the seller may contribute, and the cap varies by program, occupancy, and loan-to-value. A concession above the cap is generally reduced or reallocated rather than paid, which is why the number belongs in the offer only after a loan officer confirms it. We deliberately do not print a percentage here. Caps differ across programs and move with occupancy and loan-to-value, and a stale number in a blog post is exactly how an offer gets written wrong. Ask the loan officer for the cap that applies to this file before the concession goes into the contract. ## Credit or price reduction? ### A credit tends to help when - The buyer has the down payment but is short on closing costs and prepaids. - The parties want to fund a rate buydown rather than move the price. - Cash at the table is the binding constraint, not the loan amount. ### A price reduction tends to help when - The appraisal is the constraint — a lower price is a lower value to support. - The concession would exceed the program cap anyway. - The buyer will hold the loan a long time, where a permanently lower balance can outweigh a one-time credit. A concession is usually paid for somewhere. Raising the price to fund a credit changes the loan amount and has to appraise at the higher figure. The appraisal does not care how the parties labelled the money. ## What happens next Before the offer goes out, get the applicable cap and a rough closing-cost figure from the loan officer so the concession you ask for is one that can actually be paid. If the appraisal is the real risk, read [when the appraisal comes in low](/blog/appraisal-comes-in-low/). [Start a conversation](/qualify/). ## Common questions ### Can a seller credit cover my down payment? Seller concessions generally cannot be applied to the down payment on agency financing. They address closing costs, prepaids, and buydowns. A buyer short on down payment needs a different solution, such as documented gift funds. ### Is there a limit on how much the seller can pay? Every program caps what the seller may contribute, and the cap varies by program, occupancy, and loan-to-value. A concession above the cap is generally reduced or reallocated rather than paid, which is why the number belongs in the offer only after a loan officer confirms it. ### What happens if we agree to more than the cap? It does not simply get paid anyway. Depending on the program the excess is either disallowed and reallocated at closing or — on FHA, where an over-limit contribution is treated as an inducement to purchase — subtracted from the value used to size the loan, which cuts the loan amount as well. Either way the buyer is short at the table, and by more than the excess in the second case. Get the applicable limit from the loan officer before the concession goes into the contract. ### Is a seller credit better than a lower price? It depends on what the buyer is short on. A credit helps a buyer who has the down payment but not the closing costs. A price reduction helps a buyer constrained by the loan amount or the appraisal. They are not interchangeable. ### Can we raise the price to fund the credit? A concession is usually paid for somewhere. Raising the price to fund a credit changes the loan amount and has to appraise at the higher figure. The appraisal does not care how the parties labelled the money. On this page - [What a concession is](#what-a-concession-is) - [What it can pay for](#what-it-can-pay-for) - [The cap](#the-cap) - [Credit or price reduction?](#credit-or-price-reduction) - [What happens next](#what-happens-next) ## Keep going [How Much Cash Do I Need Besides Down Payment in Utah? Earnest money, title, origination, prepaids, and reserves sit on top of down payment. Utah closings vary by county and title company.](/blog/utah-cash-to-close-besides-down-payment/)[Earnest Money vs Down Payment vs Closing Costs Three different cash lines. Earnest money is usually credited at closing. Timing and the Utah REPC still matter. Not legal advice.](/blog/earnest-money-vs-down-payment-vs-closing-costs/)[When the Appraisal Comes In Low Lenders size the loan from the lower of price or appraised value. That turns an appraisal gap into cash, a renegotiation, or a cancellation, and all of it runs on a deadline.](/blog/appraisal-comes-in-low/)[Start a mortgage conversation What you will be asked, and what a conversation will not promise. This is not an instant approval, a lock, or a commitment to lend.](/qualify/) ## What to do next Education first. A conversation with a loan officer is how you find out what may actually fit your file. [Price a file with the credit included](/qualify/) Loan information is provided by Ondo Real Estate (NMLS ID on file). This is not a commitment to lend, a loan approval, or an offer of credit. Rates, terms, and payments shown are estimates for illustration only, are not a quote, and are subject to credit approval, underwriting, and market conditions. You are not required to use Ondo for financing to buy or sell with Ondo. Equal Housing Lender. Program rules, fees, and county loan limits change. Confirm the current published schedule and lender overlays. Nothing here is a quote, a lock, or a credit decision. [Licensing and disclosures](/licensing/)