Seller Contribution Maximums for Conventional, FHA, VA, USDA | 2026

Mortgage closing costs range from 2-5% of a home’s purchase price. That can add up. Many sellers are eager to pay your closing costs to sell their home faster, but seller contribution limits apply.

There is a limit to how much a seller can pay, though. Each loan type, including conventional, FHA, VA, and USDA, sets maximums on seller-paid closing costs.

What are seller concessions?

Seller concessions are closing costs the seller has agreed to pay. These are also known as seller-paid costs, or sometimes as sales concessions or seller contributions. New and experienced homebuyers can get into homes faster with help from the seller.

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In this article:

• Conventional loan seller contributions
• FHA loan seller contributions
• VA loan seller contributions
• USDA loan seller contributions
• How to use excess seller contributions
• Our recommended lenders for home loans

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Seller contribution limits by loan type

Each loan type has slightly different rules for seller contributions. The limits on the percentage each loan type allows vary as well. It’s important to understand the seller-paid maximums for your loan type, so you can take full advantage when it comes time to buy.

Maximum seller-paid costs for conventional loans

Fannie Mae and Freddie Mac are the two rule makers for conventional loans. They set maximum seller-paid closing costs that are different from other loan types such as FHA and VA. The limits on seller-paid costs are very generous.

A homebuyer purchasing a $250,000 house with 10% down could receive up to $15,000 in closing cost assistance (6% of the sales price). This dollar figure is a lot more than the typical seller is willing to contribute, so the limits won’t even be a factor in most cases.

Seller-Paid Concessions for Conventional Loans

Property Type	Down Payment	Maximum Seller-Paid Costs
Primary residence or second home	less than 10%	3%
Primary residence or second home	10%-25%	6%
Primary residence or second home	25% or more	9%
Investment Property	Any amount	2%

How FHA limits seller contributions

FHA seller concessions have similar rules to conventional loans. For all FHA loans, the seller and other interested parties can contribute up to 6% of the sales price toward closing costs, prepaid expenses, discount points, and other financing concessions.

FHA bases the 6% limit on the sales price, even if the home appraises for less. A low appraisal still lowers your maximum loan amount, because FHA uses the lesser of the price or the appraised value for that.

VA loan seller contribution maximum

The seller may contribute up to 4% of the home’s reasonable value (the value on the VA appraisal), plus reasonable and customary loan costs on VA home loans. Total contributions may exceed 4% because standard closing costs do not count toward the total.

According to VA guidelines, the 4% rule only applies to items such as:

• Prepayment of property taxes and insurance
• Appliances and other gifts from the builder
• Extra discount points above what is normal for the market
• Payoff of the buyer’s judgments and debts
• Payment of the VA funding fee

For example, a buyer’s core closing costs for things like appraisal, loan origination, and the title equal 2% of the purchase price. The seller agrees to prepay taxes, insurance, the VA funding fee, and a credit card balance equal to 3% of the sales price.

VA would allow this 5% contribution because 2% is going toward the core loan closing costs.

USDA seller contributions

USDA loan guidelines state that the seller may contribute up to 6% of the sales price toward the buyer’s reasonable closing costs. Guidelines also state that closing costs can’t exceed those the lender charges other applicants for similar transactions such as FHA-insured or VA-guaranteed mortgage loans.

Interested party contributions

Seller-paid costs fall within a broader category of real estate-related funds called interested party contributions or IPCs. These costs are contributions that incentivize the homebuyer to buy that particular home. The rules allow IPCs up to a set percentage of the home’s price or value.

Interested parties include your real estate agent, the home builder, and the home seller. Even funds from down payment assistance programs count as IPCs if they originate from the seller and run through a non-profit.

Anyone who might benefit from the sale of the home is an interested party, and the rules limit their contribution to the buyer.

What about your buyer’s agent? Since August 2024, offers to pay the buyer’s agent can no longer appear on the MLS, and you sign a written agreement with your agent before you tour homes. Many sellers still pay the buyer’s agent. When the seller pays your agent’s commission as is customary in your area, Fannie Mae, FHA, VA, and USDA do not count it toward the seller contribution limits on this page. If you pay your agent yourself and the seller gives you a credit instead, the credit may count toward the limit. VA buyers can now pay their own agent, but not with loan funds. Ask your lender how it will treat your agent’s pay.

Why do seller contribution limits exist?

Mortgage rule makers such as Fannie Mae, Freddie Mac, and HUD aim to keep the housing market fair by keeping values and prices sustainable.

Here’s an example of how rampant seller-paid closing costs and other interested party contributions could inflate prices.

Imagine you are buying a home worth $250,000. The seller really wants to sell the home fast, so he offers $25,000 to pay for your closing costs and says you can keep whatever is left over. But, in exchange he changes the home price to $275,000.

He then illegally pays the appraiser to establish a value of $275,000 for the home.

A number of negative consequences arise:

• You paid too much for the home.
• Similar homes in the neighborhood will start selling for $275,000 (and, more if the cycle is repeated).
• The bank’s loan amount is not based on the true value of the home.

In a very short time, property values and loan amounts are at unrealistic levels. If homeowners stop making their payments, banks and mortgage investors must cover the bill.

Check your home buying eligibility. Start here (Nov 4th, 2026)

Can the seller contribute more than actual closing costs?

No. The seller’s maximum contribution is the lesser of the sales price percentage determined by the loan type or the actual closing costs.

For instance, a homebuyer has $5,000 in closing costs and the maximum seller contribution amount is $10,000. The seller contribution limits are higher, but the seller can contribute at most $5,000.

Seller contributions may not be used to help the buyer with the down payment, to reduce the borrower’s loan principal, or otherwise be kicked back to the buyer above the actual closing cost amount.

Creative ways to use excess seller contributions

Seller contribution limits restrict credits to actual closing costs. You can constructively increase your closing costs to use up all available funds.

Imagine the seller is willing to contribute $7,000, but your closing costs are only $5,000. That’s a whopping $2,000 on the line.

In this situation, ask your lender to quote you specific costs to lower the rate. You could end up shaving 0.125%-0.25% off your rate using the excess seller contribution.

You can also use seller credits to prepay your homeowners insurance, taxes, and sometimes even HOA dues. Ask your lender and escrow agent if there are any sewer capacity charges and/or other transfer taxes or fees that you could pay for in advance. Chances are there is a way to use all the money available to you.

You can even use seller credit to pay upfront funding fees for government loan types like FHA.

Use seller contributions for upfront FHA, VA, and USDA fees

All government-backed loan types allow you to prepay funding fees with seller contributions.

FHA loans require an upfront mortgage insurance payment equal to 1.75% of the loan amount. The seller may pay this fee as part of FHA seller concessions, and it counts toward the 6% limit. However, FHA does not let you finance part of the fee and pay the rest in cash. You either roll the whole fee into the loan or pay the whole fee at closing. If the seller credit covers only part of the fee, you pay the rest in cash at closing. Or you can finance the whole fee and use the credit for other costs.

VA loans allow the seller to pay all or part of the upfront funding fee (1.25% to 3.3% of the loan amount on a purchase, based on your down payment and whether you have used the benefit before). Veterans who get VA disability compensation do not pay the fee. The fee counts towards VA’s 4% maximum contribution rule.

USDA requires an upfront guarantee fee of 1.0% of the loan amount. The buyer can use seller contributions to pay for it.

Seller contributions help many become owners

Seller contributions and other interested party credits reduce the amount of money it takes to get into a home.

Zero-down loans such as USDA and VA require nothing down. But, opening any loan involves thousands in closing costs.

A seller credit can remove the closing cost barrier and help buyers get into homes for little or nothing out-of-pocket.

To see if you qualify to buy a home with zero down and low out-of-pocket expense, click here and complete a short form.

Many home shoppers are surprised that they not only qualify, but that initial homeownership costs are much lower than they expected.

Check your home buying eligibility. Start here (Nov 4th, 2026)