Seller Concession Limits by Loan Type

Seller concessions are capped differently depending on the loan type. The cap that applies is the one in the official guide or regulation for that program, as of the date it is reviewed, and it can change. A published cap is not a promise that a seller will pay that amount, or that a particular credit will be allowed on your file.

This guide stays on those official program caps. It is not a negotiation playbook. For a broader look at what buyers usually pay at closing in this state, start with Florida closing costs. For the shorter question of whether a seller can pay toward those costs at all, see can the seller pay my closing costs in Florida.

What counts as a seller concession?

In plain terms, a seller concession is money or value the seller, the builder or developer, or another party with a financial interest in the sale contributes toward costs that are usually the buyer's to pay. That can include some closing costs, prepaid items, or discount points, depending on the program. It is not the same thing as a price cut, and it is not automatically the same as fees a seller pays under local custom.

Program rules also say what those contributions cannot be used for. On many conventional and FHA files, they cannot be used to make the buyer's down payment. If a credit is larger than the program allows, or larger than the buyer's actual allowed costs, the excess is often treated in a way that reduces the price used for underwriting. I confirm the current rule on the file, because the details are not identical from one program to the next.

Conventional loans: Fannie Mae and Freddie Mac

Fannie Mae Selling Guide B3-4.1-02, Interested Party Contributions, dated May 7, 2025 and reviewed for this article on November 10, 2026, sets maximum financing concessions as a percentage of the lower of the sales price or the appraised value, not the loan amount. For a principal residence or a second home, that maximum is 3 percent when the loan-to-value or combined loan-to-value ratio is greater than 90 percent, 6 percent when the ratio is 75.01 percent through 90 percent, and 9 percent when the ratio is 75 percent or less. For an investment property, the maximum is 2 percent at all combined loan-to-value ratios.

Fannie Mae does not permit those contributions to be used for the down payment, required reserves, or a required minimum borrower contribution. Financing concessions may be used for borrower closing costs, including prepaids, and for homeowners association assessments after closing, limited to no more than 12 months. Amounts above the cap, or above the buyer's actual closing costs, are treated as sales concessions and are deducted from the sales price used for loan-to-value calculations.

Freddie Mac Seller/Servicer Guide section 5501.6, with an effective date of May 7, 2025 and reviewed November 10, 2026, also limits financing concessions as a percentage of value, with a separate treatment for a primary residence or second home and for an investment property. The official section uses the same 3 percent, 6 percent, and 9 percent bands for a primary residence or second home, based on loan-to-value, and a 2 percent cap on an investment property. Because that Guide is updated by bulletin, I confirm the current section on your file rather than treating this article as the last word.

For the conventional loan path in general, see conventional loan programs.

FHA loans

HUD Handbook 4000.1, issued August 12, 2026 and reviewed November 10, 2026, section II.A.4.d.iii.(G), Interested Party Contributions (TOTAL), says interested parties may contribute up to 6 percent of the sales price toward the borrower's origination fees, other closing costs, prepaid items, and discount points. The 6 percent limit also includes payment for permanent and temporary interest rate buydowns and certain other payment supplements, including payment of the upfront mortgage insurance premium. I am not acting for HUD or FHA.

Contributions that exceed the buyer's actual allowed costs, or that exceed 6 percent, are treated as an inducement to purchase. An inducement is subtracted from the price used to calculate the adjusted value before the loan-to-value percentage is applied. Interested party contributions may not be used for the borrower's required down payment. For FHA rules beyond this cap, start with FHA loan requirements in Florida.

VA loans

VA Lender's Handbook, VA Pamphlet 26-7, Chapter 8, Topic 5, last changed November 8, 2010 (Change 15) and reviewed for this article on November 10, 2026, treats a seller concession as anything of value added by the builder or seller for which the buyer pays nothing additional and which the seller is not customarily expected or required to pay. Examples in that topic include payment of the buyer's VA funding fee, prepayment of property taxes and insurance, certain gifts, extra points for a permanent buydown, escrowed funds for a temporary buydown, and payoff of the buyer's credit balances or judgments.

Any seller concession or combination of concessions that exceeds 4 percent of the established reasonable value of the property is considered excessive and unacceptable for a VA-guaranteed loan. The same topic says not to include normal discount points and payment of the buyer's closing costs when totaling concessions against that 4 percent limit. I am not acting for the VA. For the broader VA path, see VA loan programs.

USDA guaranteed loans

For the USDA Single Family Housing Guaranteed Loan Program, the seller-concession rule is in 7 CFR 3555.102(h). A final rule published in the Federal Register on November 9, 2026, 91 FR 70769, and effective that same day, revised that definition. As of that date, USDA will not issue a loan guarantee for a purchase if the seller, or another interested third party, contributes more than 6 percent of the property's sales price, unless the Agency provides otherwise, toward the purchaser's mortgage financing costs, closing costs, escrow accounts, furniture, or other giveaways. The same revision states that real estate commission fees are excluded from that 6 percent limitation. I reviewed the official final rule on November 10, 2026. I am not acting for USDA. Confirm the current regulation on your file, because this rule was just amended.

Non-QM and other program paths

Some files use a Non-QM mortgage. That means the loan isn't a "qualified mortgage" under federal ability-to-repay rules, and it doesn't follow the documentation standards Fannie Mae and Freddie Mac use for a regular conventional loan. The lender still has to make a reasonable, good-faith determination, based on verified records, that you can repay. Those programs set their own contribution rules. I'm not quoting a single cap for them here. See what a non-QM loan is.

How I can help

If you want to see how a requested seller credit would be treated on a specific loan type, I can review the contract language against the current official cap for that program. As a Realtor with Realty of America, I can help you with the contract. As a Mortgage Loan Originator with PMF, Inc., I can help with the loan. PMF, Inc. is a mortgage broker that works with many wholesale lenders, so I can compare options for your situation. Rates and terms vary by lender, program and borrower, and I can't promise any particular rate or approval. You can use one or both. You don't have to use both.

Apply for a mortgage or book a consultation. Any loan approval is conditional until all underwriting conditions are met.

Common questions

Is the cap the amount the seller has to pay?

No. It is a program maximum, not a required credit and not a promised amount. The contract and the underwriting file decide what is actually paid.

Are FHA's 6 percent and VA's 4 percent the same kind of limit?

No. They are calculated on different bases, and they do not count the same items. FHA uses 6 percent of the sales price and includes certain closing-cost items inside that cap. VA uses 4 percent of the established reasonable value and, under Chapter 8, Topic 5, does not count normal discount points or payment of the buyer's closing costs toward that 4 percent.

What if the credit is larger than the cap?

On conventional files, the excess is generally treated as a sales concession and deducted from the price used for loan-to-value. On FHA files, amounts above the cap are treated as an inducement to purchase and reduce the adjusted value. On a VA file, a concession above the limit is considered excessive and unacceptable. I look at the official rule that applies before the contract relies on a large credit.

This article is for education only. It is not an offer of any loan terms and not a commitment to lend. Program rules change. We confirm what applies to your file.

Jonathan Loescher, Realtor, Florida real estate license SL3546365, Realty of America. Jonathan Loescher, Mortgage Loan Originator, NMLS 2621894. Mortgage loans are originated through PMF, Inc., NMLS 1980, a Florida licensed Mortgage Broker. Real estate and mortgage services are provided by separate companies, and you don't have to use both. Verify licensing at www.nmlsconsumeraccess.org. Equal Housing Opportunity.

Education only. This is not a commitment to lend. All loans are subject to credit approval, underwriting, and property eligibility. Not all applicants will qualify. Any loan approval is conditional until all underwriting conditions are met. Programs, rates, terms and conditions may change without notice.