Seller Credits: What They Are, How to Ask for One, and the Best Ways to Use It

Home prices are high. Mortgage rates are high. Homes are staying on the market longer. When all three happen at once, something has to give. Some sellers take their home off the market. Some lower the price. And many agree to a seller credit.

A seller credit is money the seller pays at closing toward your costs. You can use it for closing costs, for prepaid items like property taxes and insurance, or to lower your interest rate. I’m a mortgage broker, which means I shop your loan across hundreds of lenders so you don’t have to. This guide explains what a seller credit is, how to ask for one in five steps, how it compares to a price cut, and the pros and cons.

Key takeaways

• A seller credit is money the seller pays at closing toward your costs. You can use it to lower your rate.
• Sellers are giving credits in close to half of home sales, according to Redfin data.
• A strong offer is the full asking price plus a request for a seller credit.
• A $10,000 credit puts more money in your pocket than a $10,000 price cut for about 12 years.
• The most a seller can pay depends on your loan type and your down payment.
• As a mortgage broker, I shop your loan across hundreds of lenders, so you don’t have to shop your rate yourself.

On this page: What a seller credit is · Why they are common now · How to ask, step by step · Credit vs. price cut · Pros and cons · Limits by loan type · Lowering your rate · Whiz Advice · Why use a broker

What is a seller credit?

A seller credit is an amount the seller agrees to pay toward your costs when the sale closes. It is written into the purchase contract, and it shows up as a credit on your closing statement. The price of the home does not change.

You can use a seller credit for:

• Closing costs, such as lender fees, title fees and appraisal costs.
• Prepaid items, such as the first months of homeowner’s insurance and property taxes.
• A rate buydown, which lowers your interest rate for the first one or two years, or for the whole loan.

You may also hear the terms seller concession and seller contribution. They mean nearly the same thing. A seller concession is anything a seller gives to close the deal, and a seller contribution is money the seller pays toward your costs.

Why are seller credits so common right now?

Sellers want a sale, and buyers want a payment they can live with. A credit helps both. Redfin reported that sellers gave concessions in about 45% of U.S. home sales in its latest three-month report, up from about 43% a year earlier. Redfin also reported that more sellers pulled their homes off the market, with about 5.8% of listings delisted nationwide in its September data and higher numbers in some cities, like Atlanta at 13.9%.

A seller who has been on the market for weeks may not want to lower the price, because the lower price becomes part of the neighborhood record. A credit lets them keep the price and still make a deal. That gives you room to ask.

How do you ask for a seller credit, step by step?

Here is the process I walk pre-approved buyers through. It has five steps.

1. Tell your agent you want to make an offer. Get pre-approved first, so the seller knows your offer is real.
2. Decide on the offer. Offer the full asking price and ask for a seller credit up to the limit. With less than 10% down on a conventional loan, the limit is 3%. On an $800,000 home, that is $24,000 toward your closing costs.
3. Your agent presents the offer. Your agent takes it to the seller’s agent.
4. The seller responds. The seller can agree, say no, or offer something in between.
5. You agree, and the negotiation is done. If the seller says no, you can compromise or move on.

One thing to check before step 2: the home has to appraise at the price you agree to. If it appraises for less, the credit gets harder to use. Ask your agent for recent nearby sales before you write the offer.

Is a seller credit better than a price cut?

For the first 12 years or so, a credit puts more money in your pocket. Say the seller agrees to $10,000 either way. With a credit, you get the full $10,000 at closing. With a price cut, you save a little every month, and it takes about 12 years of savings to add up to $10,000. After that, the price cut comes out ahead on paper.

Caption: total dollars you come out ahead. The credit is $10,000 right away. The price cut adds up month by month. A $20,000 price cut saves about $120 a month and a $30,000 price cut saves about $180 a month. The 12-year timing is the same. The example is an $800,000 home with 10% down on a 30-year fixed loan at about 7%. Example only, not a quote.

A credit also has another advantage: you can use it to lower your rate with a buydown, which a price cut can’t do.

What are the pros and cons of a seller credit?

Pros:

• You get the money at closing. It covers costs you would otherwise pay out of your savings.
• Sellers often say yes. Many sellers will agree to a credit when they won’t lower the price.
• It can lower your rate. A credit can pay for a buydown.
• The price stays on the record. Everyone wins. The seller gets their price, the neighbors’ home values aren’t pulled down, and your new home keeps its value history.

Cons:

• There is a limit. The seller can only pay a set share of the price, and on a conventional loan the credit can’t be more than your actual costs.
• Your loan stays larger. You borrow against the full price. A price cut lowers the payment only a little, about $60 a month for every $10,000 in our example, so the bigger savings come from the closing costs you don’t have to pay up front.
• The appraisal matters. If the home appraises for less than the price, the deal can change.

How much can the seller pay on each loan type?

Every loan program has a limit, and the limit is based on the purchase price. Here are the limits:

Loan type	Most the seller can pay
Conventional (Fannie Mae and Freddie Mac), primary or second home	3% of the price with under 10% down, 6% with 10% to 25% down, 9% with 25% or more down
Conventional, investment property	2% of the price
FHA	6% of the purchase price
VA	4% of the home’s value, plus seller-paid discount points
USDA	6% of the purchase price
Jumbo	Typically 3% to 6% of the purchase price, set by each lender
Non-QM (non-traditional)	Set by each lender

Fannie Mae and Freddie Mac use the same tiers. They base the limit on the lower of the price or the appraised value. On a VA loan, the funding fee, prepaid items and buydown money count toward the 4%, and discount points do not. On a USDA loan, repair money held in escrow and a seller-paid buyer’s agent commission sit outside the 6%. Jumbo loans have no agency rule, but 3% to 6% of the purchase price is typical. Non-QM (non-traditional) loans are set by each lender. I confirm the number before you write an offer.

How does a seller credit lower your rate?

You can spend a seller credit on closing costs, or you can use it to buy down your rate. There are two kinds of buydowns:

• Temporary buydown (1-0 or 2-1). Your rate is lower for the first one or two years, then it steps up to the full rate. A 1-0 is 1 point lower in year one. A 2-1 is 2 points lower in year one and 1 point lower in year two. My 2-1 buydown page has the basics.
• Permanent buydown (discount points). The seller pays points, and your rate is lower for the whole loan. One point costs 1% of the loan amount, and it typically lowers the rate by about 0.25%, though that varies by lender and market. On an $800,000 home with 10% down (a $720,000 loan), one point costs $7,200 and lowers the payment by about $120 a month at a 7% rate. Two points cost $14,400 and lower it by about $240 a month. The savings last for the life of the loan, and it takes about five years of savings to pay back the cost of the points. That is an example, not a quote.

Here is what a temporary buydown costs, as a share of the loan amount. A 1-0 buydown costs about 0.8% of the loan. A 2-1 costs about 2.3%, because it lowers the rate twice: about 1.5% of the loan for the 2 points off in year one, plus about 0.8% for the 1 point off in year two.

On an $800,000 conventional purchase, here is how the most a seller can pay stacks up against the cost of each temporary buydown. The numbers below are examples, not quotes.

Caption: the most the seller can pay on a conventional loan next to the cost of each buydown. The example is an $800,000 home on a 30-year fixed loan at about 7%, with the same price in every column. Example only, not a quote.

After the buydown period the payment goes to the full-rate payment, so I plan for that payment from day one. If rates are lower by then, a refinance may be an option. I don’t count on it.

Whiz Advice

Here is how I would play it:

• I expect to see more seller credits, and bigger ones. If a home looks overpriced to you, I would go for the full amount in your first offer. With 5% down on an $800,000 home, that is $24,000. With 10% down, the limit is 6%, which is $48,000. The seller can only say no or counter, so asking costs you nothing.
• Ask again after the inspection. If the inspection finds problems, you can ask for a price reduction or for more seller credit, up to your limit.
• Ask for the credit in dollars, not a percent. “$20,000” is clear. Percentages invite an argument about the math.
• Write the credit for costs the lender allows. A credit can only be applied to closing costs, prepaid items and buydown costs, and anything left over can be lost. I tell you the right amount before you write the offer.
• Ask for a credit before a price cut. If the seller says no to a price cut, they may say yes to the same amount as a credit.
• Check the tier before you pick a down payment. The limit goes from 3% to 6% at 10% down. On an $800,000 home, that is a jump from $24,000 to $48,000. If you’re near a tier, ask me before you commit.
• Pay your credit card balances down. Credit card use, meaning how much of your limit you are using, is one of the biggest factors in your credit score and one of the quickest to improve. Getting below 10% of your limit is the target.

Why use a mortgage broker?

Let hundreds of lenders compete for your loan. You fill out one application.

Shopping for a mortgage on your own means applying again and again, sending the same documents over and over, and waiting on every quote. I do that part for you.

Here’s how it works:

1. Tell me your goals. I review them and structure your loan.
2. I shop it. I enter your scenario into my loan search system. It checks hundreds of lenders, including most of the big banks and big lenders, and sorts them by rate, APR (the yearly cost of the loan, including fees), monthly payment or total cost.
3. You get the best deal. If the lowest rate is your goal, I sort by rate, find the lender with the lowest rate at the moment you’re ready to lock, and lock it. Typically 350 or more lenders sit underneath with higher rates.

One application. One set of documents. Hundreds of lenders working for your business. I also make sure your application is accurate, so there are no surprises later.

Start your loan application here, and let me go to work! (opens in a new tab)

My conventional loan page covers the basics, and the mortgage calculator lets you try your own numbers.

Pick your next step:

• Ready to get pre-approved? Start your loan application (opens in a new tab). It’s the fastest way to find out what you can buy.
• Have a one-of-a-kind situation? Book a 15-minute call (opens in a new tab) and we’ll talk it through.
• Just have a question? Email me at [email protected] with your scenario, and I’ll write back.

I’m a mortgage broker with NEXA Lending, and I work with borrowers in all nine states where I’m licensed (CA, CO, TX, FL, GA, NC, SC, TN, VA). As a broker, I can shop your loan across hundreds of lenders. Programs, rates and approval depend on your full file. This is educational and not tax or legal advice.

Last reviewed October 21, 2026

Sources: Redfin data reported by Inman (opens in a new tab), Redfin data reported by Mortgage Professional America (opens in a new tab), Redfin Data Center (opens in a new tab), Fannie Mae Selling Guide B3-4.1-02 (opens in a new tab), Freddie Mac Guide 5501.6 (opens in a new tab), HUD FHA answers (opens in a new tab), VA temporary buydowns (opens in a new tab), VA loan fees and closing costs (opens in a new tab), USDA Handbook HB-1-3555, Chapter 6 (opens in a new tab).