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Seller’s Concession: Reducing Your Closing Costs

Couple calculating financial budget for home purchaseWhat is Seller’s Concession?

Seller’s concession is a dollar amount or a percentage of the purchase price that a seller agrees to contribute to the buyer in order to help cover the buyer’s closing costs. This is helpful for home buyers who may not have the funds to cover closing costs, or who may want to avoid having extra money tied up in a mortgage.

How Seller’s Concession Works

An example may better clarify the concept of seller’s concession. Imagine that a buyer is purchasing a home for $100,000 and is eligible to receive seller’s concession of 6% of the purchasing price. This raises the sale price of the house to $106,000.

If the offer is accepted, the seller will still receive $100,000 for the property (known as “net to seller”) and the $6,000 extra in the loan amount will be used to help the buyer cover closing costs. In order to be able to use seller’s concession, the home must appraise for the new sale price of $106,000.

How Does Seller’s Concession Vary Based on Loan Type?

Seller’s concession amounts vary based on mortgage type. Maple Tree Funding and our wide variety of lenders offer numerous loan programs with varied seller’s concession percentages.

  • Seller’s Concession for an FHA Mortgage – Up to 6% of the selling price
  • Seller’s Concession for a USDA Mortgage – Up to 100% of the financing based on the appraisal value
  • Seller’s Concession for a VA Mortgage – Up to 100% of the financing can be covered through the use of concessions regardless of the percentage
  • Seller’s Concession for a Conventional Mortgage
    • If the Loan to Value is 75% and lower, the buyer can use 9% seller’s concession.
    • If the Loan to Value is between 75.01% and 90%, the buyer can use 6% seller’s concession.
    • If the Loan to Value is above 90.01%, the buyer can use 3% seller’s concession.
  • Seller’s Concession for an Investment Property – Up to 2% seller’s concession for a Loan to Value below 90%

Need Help Navigating the Complexities of Seller’s Concession? Let Maple Tree Funding Help!

The team of experienced mortgage professionals at Maple Tree Funding can help you every step of the way when it comes to buying a home. Our knowledgable staff can help you fully understand seller’s concession and guide you through all the steps of the mortgage process.

Looking for more information about seller’s concession and how it works? Contact us today! Give us a call at 518-782-1202 or fill out our online form to have your questions answered!

Posted in Mortgage Basics & Information on Thursday, May 3, 2012 by Maple Tree Funding