Rony Velasquez, Real Estate and Mortgage Broker, Realtor, and Mortgage Loan Originator, has held his DRE license since 2004. With more than twenty-two years of experience, over three thousand transactions, and more than five hundred families helped, he has watched buyers plan carefully for the down payment and then get surprised by the second bill that shows up at closing.
There is a line in a purchase offer that many first-time buyers never think to use, and it can be the difference between keeping your savings intact and starting homeownership with an empty account.
Closing costs add up quickly, and a seller credit sounds like a simple fix. The catch is that the rules change by loan type, the credit can only cover eligible costs, and asking for too much or wording it the wrong way can quietly weaken your offer.
Picture this: you find a home in Buena Park that fits everything you want, but paying closing costs out of pocket would leave your savings uncomfortably thin. Instead of asking for an open-ended credit, you and your Realtor review the lender’s estimate, check the rules for your loan, and request one specific, supportable amount. The seller sees a clean request, not a vague one.
That does not guarantee acceptance, but it means you are asking with a plan instead of a hope. Here is how seller concessions work in California in 2026.
What Are Seller Concessions?
Seller concessions are amounts the seller agrees to contribute toward certain costs you would otherwise pay in connection with buying the home. Depending on your loan and the agreement, they may cover eligible items such as lender fees, title and escrow charges, prepaid property taxes, or homeowners insurance.
A concession is usually shown in the purchase contract and then accounted for at closing. It is not generally cash handed to you, and it cannot be used to cover your down payment when loan rules prohibit that. The lender must approve the credit, and it usually cannot exceed your eligible closing costs.
Not every seller-paid expense is treated the same way. For example, a customary seller-paid fee may be handled differently from a negotiated credit toward the buyer’s costs. Ask your lender to classify each item before you rely on it.
What Are the Typical Seller-Concession Caps by Loan Type?
The exact amount you can use depends on the loan program, occupancy, eligible costs, and lender requirements. These are common guidelines to discuss with your lender, not a promise that every loan will allow the maximum.
- FHA purchase loan: Seller and other interested-party contributions are generally limited to six percent of the sales price toward permitted costs. The credit cannot be used for your required down payment, and it cannot exceed your eligible costs. FHA loans generally require you to occupy the property as your primary residence, though certain eligible two-to-four-unit properties may qualify if you live in one unit. Review HUD’s FHA Single Family Housing Policy Handbook and confirm current requirements with your lender.
- VA purchase loan: The seller may pay some or all allowable buyer closing costs. Those ordinary closing-cost payments are not subject to the separate four percent cap on defined seller concessions. The cap applies to specific additional benefits, such as paying the VA funding fee or certain prepaid costs. VA loans generally require owner occupancy. See the Department of Veterans Affairs guidance on funding fees and closing costs.
- Conventional purchase loan for a primary residence or second home: Under Fannie Mae’s conforming-loan guide, the common maximum financing concession is three percent when the loan-to-value ratio is above ninety percent, six percent when it is above seventy-five percent and up to ninety percent, and nine percent when it is seventy-five percent or less.
- Conventional investment property: Fannie Mae’s maximum financing concession is generally two percent, regardless of the loan-to-value ratio. FHA and VA are not general-purpose investment-property loans because of their occupancy requirements.
Conventional limits are calculated using the lower of the sales price or appraised value, not the loan amount. The contribution is also limited by your actual eligible costs. See Fannie Mae’s current interested-party contribution guidance. Your lender should confirm the correct calculation and any additional program or lender restrictions.
How Should You Put the Request in Your Offer?
Work with your Realtor and lender before you submit the offer. The contract should state the requested seller contribution clearly, using the proper contract language and any required addendum. In plain terms, the request might say that the seller will credit the buyer up to a specified amount toward eligible closing costs and prepaid items, subject to loan-program limits and lender approval.
For example, if your lender estimates that you may have eight thousand dollars in eligible costs, you might discuss requesting up to that amount, not a larger credit you may be unable to use. Your lender can confirm the estimate and the offer language should be prepared by your real estate professional.
Before making the request:
- Ask for a current cost estimate. Review the lender’s Loan Estimate and ask which charges can be covered by a seller credit.
- Confirm the maximum for your loan. Make sure the proposed amount fits the program cap and your actual eligible costs.
- Specify how the credit will be used. Identify eligible closing costs and prepaids rather than asking for vague “cash back.”
- Keep the terms consistent. Tell your lender about every seller-paid amount so the contract, underwriting, and final Closing Disclosure match.
Will a Seller Credit Change the Purchase Price or Appraisal?
A seller credit does not automatically change the agreed purchase price. However, buyers and sellers sometimes negotiate a different price along with a credit. That needs care: the appraiser evaluates the property and comparable sales, not simply the contract’s credit arrangement.
If the agreed price is higher than the appraised value, your loan may be based on the lower value or otherwise be affected by program rules. You could need to bring more funds, renegotiate, or use a contract contingency if one applies. A higher price can also increase your loan balance and ongoing housing costs.
On conventional loans, a contribution above the allowed cap, or above your eligible costs, may be treated as a sales concession, which can affect the value used in the lender’s calculations. Do not raise the price just to make a credit appear affordable without reviewing the appraisal risk and your cash-to-close with your lender.
How Can You Ask Without Making Your Offer Less Competitive?
There is no wording that guarantees an accepted offer. Your goal is to make the request reasonable for the property and seller, while keeping your offer strong in other ways.
- Check the listing and local context. Ask your Realtor about comparable sales, time on market, price changes, and whether the seller has signaled flexibility.
- Request only what you need. A smaller, well-supported credit may be easier for a seller to consider than the maximum permitted amount.
- Make the rest of the offer clear. Include a solid lender preapproval, realistic timelines, and complete documentation. Do not waive protections without understanding the risk.
- Consider the seller’s priorities. A preferred closing date or other workable term may matter alongside the net proceeds.
- Plan a fallback. Decide in advance whether you can pay part of the costs yourself or whether you would rather keep looking.
What Should You Check Before You Submit the Offer?
Use this checklist with your lender and Realtor:
- I know my loan type and whether I will occupy the home.
- I have a current estimate of eligible closing costs and prepaid items.
- My lender has confirmed the applicable concession cap and any lender-specific limits.
- The requested amount does not exceed my eligible costs or the program maximum.
- The purchase contract states the credit clearly and all parties will disclose it.
- I understand that the credit cannot automatically cover my down payment or be paid to me as cash.
- I have considered appraisal risk, cash needed at closing, and the possibility the seller declines.
- I will review the final Closing Disclosure to confirm the agreed credit is applied correctly.
For more consumer-focused homebuying resources, visit Maya Team Inc.
Have questions about your offer or closing-cost estimate? Contact Rony Velasquez, Real Estate and Mortgage Broker, Realtor, and Mortgage Loan Originator, at 562-762-9634 or mayateaminc@gmail.com. You can also send a direct message through the Maya Team Inc page. Mona Bottros is Realtor and Office Manager.
Seller contributions depend on your loan approval, eligible costs, contract terms, appraisal, and current lender rules. Ask your lender and real estate professional to review the details for your specific purchase.
If you know someone buying their first home in Buena Park or Southern California, send this guide to them before they write an offer.
