Many Texas buyers write offers the way they would have in 2021: full price, no requests, hoping to look strong. In much of the state today, that leaves money on the table.
With more homes for sale and listings sitting longer, sellers in Austin, San Antonio, Dallas-Fort Worth and Houston are paying toward buyers’ closing costs and interest rate buydowns again. A well-structured concession can lower your monthly payment, keep more cash in the bank, or both.
The catch is that every loan program caps how much a seller can contribute, and the caps work differently. A VA loan counts concessions one way, a conventional loan another, and a bank statement loan follows its lender’s own rules. Ask for more than your loan allows and the extra is wasted, or the deal has to be rewritten before closing.
This guide explains how concessions work, how much each loan type allows, and how veterans and self-employed buyers can use them to win a deal on better terms.
What Are Seller Concessions, and Why Are Sellers Offering Them Now?
A seller concession, often referred to as seller credit, is money the seller agrees to put toward the buyer’s costs at closing. It is written into the purchase contract and shows up on the closing disclosure as a seller credit. It is NOT CASH in the buyer’s pocket.
Concessions are usually used for:
- Closing costs: lender fees, title, appraisal and survey
- Prepaid items: the first year of homeowners insurance, property tax escrow and prepaid interest
- Rate buydowns: discount points that lower the rate for the life of the loan, or a temporary buydown such as a 2-1
- Loan-specific costs, such as the VA funding fee
The market explains why sellers are saying yes. Redfin reported that 44.7% of U.S. home sales included a seller concession in the three months ending August 2026, and it named Houston among the strongest buyer’s markets in the country, with more than two sellers for every buyer (MPA, citing Redfin).
For many sellers, a concession is easier to accept than a price cut. The sale price stays where they want it, and the buyer gets help where it matters most: cash to close and the monthly payment. It allows for both parties to meet in the middle.
How Much Can a Seller Pay? Limits by Loan Type
Each loan program sets its own cap, and the cap is a percentage of the lower of the price or the appraised value.
| Loan type | Maximum seller contribution | What counts toward the cap |
|---|---|---|
| VA | 4% of the home’s reasonable value, plus all of the buyer’s normal closing costs and normal discount points | Funding fee, prepaid taxes and insurance, paying off the buyer’s debts, temporary buydown funds, points above market norms |
| Conventional, primary or second home, less than 10% down | 3% | Closing costs, prepaids and buydowns all count |
| Conventional, primary or second home, 10% to 24.99% down | 6% | Same |
| Conventional, primary or second home, 25% or more down | 9% | Same |
| Conventional, investment property | 2% | Same |
| Bank statement (non-QM) | Set by each lender, commonly 3% to 6% | Varies by lender |
Why the VA rule is different (and why we love VA!)
The VA cap is the most generous, and the least understood. The VA Lender’s Handbook says seller concessions “do not include payment of the buyer’s closing costs, or payment of points as appropriate to the market” (VA Lender’s Handbook, Ch. 8, Topic 5).
In practice, a seller can pay a veteran’s normal closing costs and market-rate discount points in full. On top of that, the seller can contribute up to 4% of the reasonable value toward the items VA does count, such as the funding fee, prepaid taxes and insurance, or paying off the veteran’s credit card balances.
The handbook gives an example: if the market rate comes with two discount points and the seller pays five, only the three extra points count toward the 4% limit.
What happens if you ask for too much
On a conventional loan, any contribution above the cap, or above your actual closing costs, is treated as a reduction in the sale price, and your loan-to-value is recalculated (Fannie Mae Selling Guide B3-4.1-02). Seller credits also cannot be used for your down payment or reserves. The fix is to size the request to what you can actually use before you write the offer.
What Does This Look Like for Real Buyers?
The two scenarios below are hypothetical, with rounded numbers. Actual costs and limits depend on the property, the lender and the appraisal.
Frisco: A Veteran Using More Than 4% in Seller Help
An Army veteran leaving Fort Killeen is buying a $550,000 home in Frisco with no down payment. This is the first use of the VA benefit, and the veteran does not receive disability compensation.
| Item | Amount | Counts toward VA’s 4%? |
|---|---|---|
| Normal closing costs | $8,500 | No |
| VA funding fee (2.15% first use, 0% down) | $11,825 | Yes |
| Prepaid taxes, insurance and escrow | $6,500 | Yes |
| Payoff of a credit card balance | $3,500 | Yes |
| Total seller credit | $30,325 | $21,825 counted |
The 4% limit on a $550,000 reasonable value is $22,000. The counted items total $21,825, so the request fits. The full credit equals about 5.5% of the price, which is possible only because VA excludes normal closing costs from the cap.
Two results matter here. Because the seller pays the funding fee, the veteran does not have to add $11,825 to the loan balance. And paying off the credit card removes a monthly payment from the debt-to-income calculation.
A veteran who receives disability compensation is exempt from the funding fee (VA Lender’s Handbook, Ch. 8, Topic 8). That leaves the full 4% available for prepaids, debt payoff or a buydown.
Austin: A Self-Employed Buyer Protecting Cash Reserves
A business owner qualifying on 12 months of bank statements is buying a $600,000 home in Austin with 10% down, a $540,000 loan. The lender in this example allows seller contributions up to 6% at this loan-to-value, or $36,000.
The buyer’s agent asks for $24,000 in seller credit instead of a $24,000 price reduction. Here is where the $24,000 credit goes:
| Item | Amount |
|---|---|
| Lender fees (origination, underwriting, processing) | $3,500 |
| Title insurance and escrow fees | $3,400 |
| Appraisal | $650 |
| Survey | $500 |
| First year of homeowners insurance | $3,200 |
| Property tax escrow (3 months) | $3,000 |
| Prepaid interest | $1,650 |
| Closing costs and prepaids | $15,900 |
| Discount points to lower the rate (1.5 points on $540,000) | $8,100 |
| Total seller credit | $24,000 |
And here is how it compares with a $24,000 price cut:
| $24,000 price cut | $24,000 seller credit | |
|---|---|---|
| Sale price | $576,000 | $600,000 |
| Down payment (10%) | $57,600 | $60,000 |
| Closing costs and prepaids paid by buyer | $15,900 | $0 |
| Rate buydown | None | 1.5 points, paid by seller |
| Cash the buyer brings to closing | $73,500 | $60,000 |
The credit leaves the buyer with $13,500 more in the bank and a permanently lower rate. For a self-employed buyer, that cash matters. Bank statement lenders often require several months of reserves, and business income can be uneven from month to month.
The price cut does produce a slightly smaller loan. Which option is better depends on how long the buyer plans to keep the loan, which is worth running with your loan officer before writing the offer.
How Do You Ask for Concessions Without Weakening Your Offer?
A concession request is a negotiation, and how it is framed affects how the seller reads it.
- Get pre-approved first, with your loan type confirmed. Your loan officer can tell you the exact cap and your estimated closing costs, so the request is sized correctly.
- Ask for a dollar amount, not a percentage. “$12,000 toward buyer’s closing costs and prepaids” is clearer to a seller than “3%.”
- Check how long the home has been listed. A listing that has sat for 45 days, or has had a price drop, is a better candidate than one that just hit the market.
- Consider offering closer to list price in exchange for the credit. The seller’s net may be about the same, while your cash to close drops.
- Leave room for the appraisal. If the home appraises low, the cap shrinks with it, because limits are based on the lower of price or value.
- Decide in advance how the credit will be used. Closing costs, a permanent buydown and a 2-1 temporary buydown each change your payment differently. Choose before the contract, not at the closing table.
VA buyers in particular should make sure their agent knows the VA rules. Many agents assume VA works like conventional and cap the request at 3% or 4% of the price, when the veteran could have asked for more.
Why Working With a Mortgage Broker Matters
Concession limits on VA and conventional loans are set by VA and Fannie Mae, but bank statement limits are set lender by lender. One lender may allow 6% at 10% down while another allows 3%. As a broker, I can compare lenders before you write the offer, so the concession you negotiate is one your loan can actually use.
The Bottom Line
In today’s Texas market, the strongest offer is not always the one that asks for nothing. A well-sized seller concession can cover your closing costs, lower your rate and protect your savings, while the seller keeps the price they wanted.
The key is knowing your loan’s limit before you negotiate. Veterans can often ask for more than they think, and self-employed buyers should confirm their lender’s cap first.
If you are planning to make an offer, schedule a call with me or apply now and I’ll help you size the request before you write it.
Frequently Asked Questions
Can a seller pay all of my closing costs on a VA loan?
Yes. VA does not count the buyer’s normal closing costs or market-rate discount points toward its 4% concession limit, so a seller can pay them in full.
What counts toward the 4% VA concession limit?
Items such as the VA funding fee, prepaid taxes and insurance, paying off the buyer’s debts, temporary buydown funds and discount points above what is normal for the market.
Can a seller pay off a credit balance for a veteran?
Yes. The VA Lender’s Handbook lists the “payoff of credit balances or judgments on behalf of the buyer” as an allowable seller concession. It counts toward the 4% limit, and removing that monthly payment can lower the veteran’s debt-to-income ratio. This is a VA-specific benefit: on conventional loans, seller contributions are limited to closing costs, prepaids and HOA dues, so extra seller credits above the amount of closing costs would be applied to reduce the sale price used for the loan instead.
How much can a seller pay on a conventional loan in Texas?
For a primary residence or second home, 3% with less than 10% down, 6% with 10% to 24.99% down, and 9% with 25% or more down. Investment properties are limited to 2%.
Can seller concessions be used for my down payment?
No. Seller credits can go toward closing costs, prepaids and buydowns, but not the down payment or required reserves.
Do bank statement loans allow seller concessions?
Yes, but each lender sets its own limit, commonly between 3% and 6%. Confirm your lender’s cap before you negotiate.
Is a seller concession better than a price reduction?
Often, when cash to close is the bigger concern. A price cut lowers the loan amount slightly, while a concession can cover thousands in closing costs or buy down your rate.
Scenarios are hypothetical and for illustration only. All loans are subject to credit approval, underwriting and program guidelines.