Seller Concession Calculator

Calculate the maximum seller concession allowed for your loan type, compare rate buydown vs closing cost credit, and build the right offer strategy. Covers Conventional, FHA, VA, and USDA loan limits.

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Maximum Allowed Concession
$21,000
Conventional: 6% (LTV 76-90%, 10-24% down)
Allowed Concession
$10,000
Concession % of Price
2.86%
Effective Purchase Price
$340,000
Down Payment
$35,000

Compare the value of different ways to use your $10,000 concession.

Rate Buydown
$27,242
30-year NPV of savings
Buys 3.2 points → rate 5.956%
Save $163/mo
Best if you stay >5 years
Closing Cost Credit
$10,000
Immediate cash value
Covers $9,450 of closing costs
Remaining you pay: $0
Best if cash-tight at closing
Repair / Repair Credit
$10,000
Face value
Credited toward repairs
Useful if home needs work
Note: some loan types restrict
If you plan to stay long-term, a rate buydown often provides the most total value. If you need cash now or plan to refinance soon, a closing cost credit is more practical.

Present value of each concession type over the loan life (discounted at 6%).

Rate Buydown NPV
$27,242
3.2 pts → 5.956% rate
Closing Credit NPV
$10,000
Immediate, dollar-for-dollar value
Monthly Savings (Buydown)
$163
Rate 6.8% → 5.956%
NPV Advantage
$17,242
Rate buydown wins

Buydown Break-Even Timeline

3 years in homeSavings: $5,880 (not yet recovered)
5 years in homeSavings: $9,800 (not yet recovered)
7 years in homeSavings: $13,720 (break-even reached)
10 years in homeSavings: $19,600 (break-even reached)
15 years in homeSavings: $29,400 (break-even reached)

How to Use This Seller Concession Calculator

Enter the home purchase price, loan type, down payment percentage, and the concession amount you want to request. The calculator instantly shows the maximum allowed concession for your loan program, whether your request is within limits, and the effective impact on your cash at closing.

Quick Tab

The Loan Type selection is critical — different programs have very different limits. Conventional loans with less than 10% down are capped at 3%, while the same loan with 25%+ down allows 9%. FHA is always 6% regardless of down payment.

Advanced: Concession Types

The Concession Types tab compares the value of using your concession for a rate buydown vs. a closing cost credit vs. a repair credit. The calculator shows the 30-year net present value of each option, helping you pick the highest-value use of the seller contribution.

Professional: Offer Strategy

The Offer Strategy tab analyzes the "higher price + concession" tactic — useful in competitive markets when you need closing cost help but want to keep your offer attractive to sellers.

Seller Concession Limits by Program

Conventional Loan Limits:
• LTV > 90% (down < 10%): 3% of purchase price
• LTV 76–90% (10–24% down): 6% of purchase price
• LTV ≤ 75% (25%+ down): 9% of purchase price

FHA: 6% of purchase price (all LTVs)

VA: 4% in "true concessions"
(plus reasonable closing costs paid on buyer's behalf)

USDA: 6% of purchase price

Example ($350,000 home, 10% down, Conventional):
LTV = 90% → Maximum = 6% × $350,000 = $21,000

Any concession amount above the program limit must be subtracted from the purchase price by the lender. If you agree to a $25,000 concession on a $350,000 Conventional purchase with 10% down, the lender treats the effective price as $329,000 and the loan won't qualify for the full amount.

Example: Rate Buydown vs Closing Cost Credit

Jessica buys a $400,000 home with $16,000 concession

Purchase Price$400,000
Down Payment10% ($40,000)
Loan Amount$360,000
Rate6.875%
Seller Concession$16,000 (4% — within 6% limit)
Option A: Rate Buydown
Points Purchased4.4 points ($16,000)
Rate Reduction~1.1% → 5.775%
Monthly Savings~$240/mo
30-Year NPV~$37,000
Option B: Closing Cost Credit
Cash Saved at Closing$16,000
Immediate Value$16,000
Winner for long-term stayRate Buydown (+$21,000 NPV)

If Jessica plans to stay 7+ years, the rate buydown provides $21,000 more in net present value. If she might move in 4-5 years or refinance, the closing cost credit is better.

Frequently Asked Questions

No — seller concessions cannot be applied toward your down payment. They can only be used for closing costs, prepaid items (taxes, insurance, interest), or rate buydowns. The purchase price and loan amount remain the same; the seller simply pays certain costs on your behalf at closing. Your down payment must still come from your own funds (or approved gift sources).
Prepaid items are upfront costs paid at closing for future expenses: property tax escrow deposits, homeowner's insurance premium, prepaid mortgage interest (from closing to first payment), and initial PMI premium. These can often be covered by seller concessions, reducing your out-of-pocket cash at closing alongside traditional closing costs.
Yes — discount points (permanent buydowns) are an approved use of seller concessions. Each point equals 1% of the loan amount and typically reduces the rate by 0.25%. Temporary buydowns (like 2-1 buydowns where the rate is artificially reduced for the first 2 years) are also allowed. Temporary buydowns have become popular when rates are high, helping buyers qualify with lower initial payments.
If the appraisal comes in below the purchase price, you have several options: (1) renegotiate the price down, (2) pay the difference in cash (appraisal gap coverage), (3) cancel the contract if you have an appraisal contingency. A savvy move: use an existing concession agreement as leverage to renegotiate — "either reduce the price or maintain the concession" often yields the same net result for the seller.
Seller concessions appear on the closing disclosure (CD) and are part of the official real estate transaction record. For the seller, concessions reduce their net proceeds and thus their capital gains. For the buyer, concessions generally reduce your tax basis (the amount added to home cost basis is reduced by the concession). Consult a tax professional for your specific situation.

Related Calculators

🏠Mortgage Calculator 📋Closing Costs Calculator 🏛️FHA Loan Calculator ⭐VA Loan Calculator 💵Down Payment Calculator 📐Appraisal Gap Calculator

Sources & References