Costs & Fees
What are seller concessions and how do they work?
Updated Jul 1, 2026
The short answer
Seller concessions are closing costs the seller agrees to pay on the buyer’s behalf, negotiated as part of the purchase contract. They can reduce your cash to close, but loan programs cap how much a seller (or other interested party) can contribute, based on loan type and down payment. Concessions must go toward allowable costs, not cash back to the buyer.
Key points
- Seller pays some of the buyer’s closing costs by agreement.
- Loan programs limit the maximum contribution.
- Must fund allowable costs, not cash back.
- They lower cash to close, not the home price.
Concession vs. price cut
A price reduction lowers your loan and monthly payment; a concession lowers your up-front cash. Which helps more depends on whether your constraint is cash on hand or long-term payment.
Sources
Every claim above traces to a public government source.