The Easiest Way to Reduce Your Home Buying Costs at Closing

What Are Seller Concessions? The Simple Breakdown Every Homebuyer Needs

If you’re getting ready to write an offer on a home, you’re going to hear the term “seller concessions.” It sounds like industry jargon, and it is, but the concept is actually simple once someone explains it clearly.

In this article, we’ll walk through what seller concessions are, why they matter more in today’s market, and how asking for concessions can make a much bigger financial impact than negotiating a small price drop.

What Are Seller Concessions?

Seller concessions are costs the seller agrees to pay on behalf of the buyer. These are expenses the buyer would normally cover, such as closing costs, prepaid taxes and insurance, or even interest-rate buydowns.

A simple analogy:

Imagine your landlord offering to pay for your moving truck. It doesn’t change your rent or where you live, but it puts more cash in your pocket on move-in day. That is essentially what a concession does at closing.

Why Concessions Matter More in Today’s Market

During the pandemic, sellers had all the leverage. Homes sold in hours, multiple offers rolled in, and concessions were almost nonexistent.

Today the environment is different. Homes are sitting longer. Price reductions are common. Sellers are more flexible. We are now in a market where buyers have room to negotiate, and concessions are back on the table.

Price Drop vs. Seller Concession: A Real Example

Let’s say a home is listed for $500,000 and the seller is willing to give buyers $10,000 of wiggle room.

Two buyers write offers:

Buyer A: Asks for a $10,000 price reduction. New price: $490,000 • Payment changes by about $60 per month • Cash to close barely moves • Debt-to-income ratio barely changes • Loan approval stays basically the same

Buyer B: Asks for a $10,000 seller concession. Price stays at $500,000 • Seller covers $10,000 of the buyer’s closing costs • Cash to close drops significantly • Monthly payment may drop if the concession is used for a rate buydown • Ratios improve • Approval becomes cleaner

It is the same $10,000, yet the outcomes are completely different. This is why concessions often make more financial sense than negotiating a lower purchase price.

Do Concessions Hurt Your Approval? (Short answer: No.)

Many buyers worry that asking for concessions makes their offer look weak or signals that they are less qualified. This is not true.

A concession does not change your credit, your income, your assets, your debt, or your overall risk profile. Underwriting only cares whether the loan meets guidelines, not whether the seller pays part of the costs.

In many cases, concessions actually strengthen the loan because they reduce the cash required and improve key ratios.

How Much Can You Ask For? (By Loan Type)

Here is a quick snapshot:

Conventional Loans: • 3%, 6%, or 9% depending on down payment

FHA: • Up to 6%

VA: • Up to 4%

USDA: • No official cap, but the amount must be “reasonable and customary”

Most buyers have more room than they think when it comes to structuring a smarter offer.

Why Concessions Create Real Affordability

Most buyers run into two pain points: 

• The cash required at closing feels too high 

• The payment feels too high

A small price drop rarely fixes either issue.

A seller concession directly lowers your upfront cash, can reduce your monthly payment, makes approvals easier, does not negatively affect the seller, and helps you structure a more affordable loan overall.

It is one of the most practical tools in today’s market.

Final Thoughts

Seller concessions do not weaken your offer if negotiated reasonably in the right market conditions. They give you options. They reduce what you need at closing, can improve affordability, and in some cases lead to stronger loan approvals.

If you want to dive deeper, check out the latest episode of Mortgage Made Simple, where we break down real-world scenarios, temporary rate buydowns, and smart offer strategies in more detail.