What seller concessions are
A seller concession, also called a seller credit, is an amount the seller agrees in the contract to pay toward your costs. It's shown on your Closing Disclosure and reduces the cash you bring to closing. It isn't a price cut, though some buyers trade a slightly higher offer for a credit.
What they can pay for
- Lender and third-party closing costs
- Prepaid interest and your escrow deposits for taxes and insurance
- Discount points to lower your rate
- A temporary buydown that lowers your rate for the first year or two
What they can't pay for
Concessions can't be used for your down payment. They also can't exceed your actual costs. If the credit is larger than what it can be applied to, the extra usually goes unused rather than coming back to you as cash.
Program limits
Each loan program sets a maximum. For conventional loans, the cap often ranges from 3% to 9% of the price, depending on your down payment. FHA loans commonly allow up to 6%. Other programs have their own rules. Your loan consultant will confirm your limit before you make your offer.
How concessions work with ZERO Closing Costs
CapCenter's ZERO Closing Costs pays for or waives the closing costs typically required to process the loan (restrictions apply). Because your lender fees are already covered, a seller credit usually goes toward the costs you'd still pay, such as escrow deposits and prepaid interest. It might also fund a buydown or points, within program limits.
When to ask for them
Concessions are easier to get when homes are sitting longer or the seller is motivated. In a competitive market, a request can make your offer less appealing. Your agent can help you decide whether to ask for a credit, a lower price, or neither. Ask only for what you can actually use.
