What is a seller credit?
A seller credit, sometimes called a seller concession, is money the seller agrees in the purchase contract to put toward your costs at closing. It shows on your Closing Disclosure A five-page form you receive at least three business days before closing that shows your final loan terms and costs. See the full glossary as a credit from the seller. Lenders treat it as an interested party contribution, because it comes from someone with a stake in the sale.
What can a seller credit pay for?
- Closing costs, like lender fees, title and the closing attorney.
- Prepaid items, like the first year of homeowners insurance and the escrow deposit for property taxes.
- Discount points Optional fees paid at closing to lower your interest rate. One point equals 1% of the loan amount. See the full glossary or a temporary rate buydown (below).
A seller credit generally can't count toward your down payment or your reserves, and it can't be more than your actual costs. If the credit is larger than the costs it can cover, the extra can't be used, so the amount matters.
Are there limits?
Yes. Conventional, FHA, VA and USDA loans each cap how much the seller can contribute, and for conventional loans the cap depends on your down payment and whether the home is your primary residence, a second home or an investment. Tom checks the cap for your loan before your agent writes the offer, so the number you ask for is one the loan can use.
How does a rate buydown work?
Permanent buydown. Discount points paid at closing lower the interest rate for the life of the loan. The closing costs guide explains points.
Temporary buydown. A lump sum, often paid by the seller, lowers your payment for the first year or two, then the payment steps up to the full amount. Fannie Mae requires you to qualify at the full note rate, so a temporary buydown helps with early cash flow, not with qualifying. If buydown money comes from the seller, it counts toward the seller contribution limit.
Which works better depends on how long you plan to keep the loan and whether you might refinance. Tom can show the payment and total cost of each side by side.
How do I ask for a seller credit?
Your real estate agent writes the credit into the purchase and sales agreement as a dollar amount. Tell Tom before the offer goes in so the amount fits your program's limits and your estimated costs. If the home inspection turns up repairs, a credit can also come up then; the home inspection guide covers NH checks.
Is a credit better than a lower price?
It depends on what you're short on. A lower price lowers the loan amount and the monthly payment for the life of the loan, while a credit lowers the cash you need at closing or your early payments. The home still has to appraise for the contract price. The payment calculator can help you compare the two.
Sources
- Fannie Mae Selling Guide B3-4.1-02, Interested Party Contributions
- Fannie Mae Selling Guide B2-1.4-04, Temporary Interest Rate Buydowns
- CFPB, What are discount points?
Checked October 2026. Limits and program rules change, so confirm current figures before you rely on them.
General information only, not tax or legal advice. Program availability, eligibility and terms vary by lender and are subject to change and to underwriting approval. Not a commitment to lend.