PATRICK’S QUICK ANSWER
A seller concession is money the seller contributes to your closing costs, written into the TREC contract. It can cover title, lender fees, prepaids, even discount points, without you bringing more cash. Limits vary by loan: FHA allows up to 6% of the purchase price, VA up to 4%, and conventional up to 3% on low-down-payment loans. In today's market, asking is normal.
A seller concession is money the seller agrees to contribute toward your costs at closing, written as a dollar amount or percentage in the TREC contract. It is one of the most valuable tools a buyer has in today's more balanced San Antonio market, because it can cover title, lender fees, prepaids, even discount points, without you bringing more cash. Here is how it works and when it makes sense to ask for it.
I will cover the contract mechanics, the limits each loan type places on concessions, how they combine with down payment assistance, how to negotiate them, and the closing cost math on a median San Antonio home. Every figure is an estimate.
What a Seller Concession Actually Is
A seller concession is an agreed contribution, not a discount off the price (though it is often negotiated in tandem with price). The seller pays up to that negotiated amount toward your closing costs, points, or prepaids at closing. It reduces the cash you bring without changing your loan balance, because it is not financed into your mortgage. The amount and which costs it can touch are written into the TREC One to Four Family Residential Contract.
Limits by Loan Type
Each loan program caps how much a seller can contribute, and lenders enforce their own overlay on top, so I always confirm the exact number for your specific loan. These are the commonly cited program boundaries.
- FHA: on a primary residence, seller concessions may go up to 6% of the purchase price in down payment assistance scenarios, so a buyer using assistance for the down payment can use the full 6% toward their other costs.
- VA: eligible veterans may receive up to 4% of the loan amount in seller concessions without reducing the 100% financing benefit, with the balance of closing costs covered by the buyer.
- Conventional (Fannie Mae and Freddie Mac): caps typically run 3% to 9% depending on the down payment and occupancy, with lower down payments generally carrying the lower cap.
- USDA and other programs have their own limits, which is why we confirm the cap before we negotiate the number.
How Concessions Combine With Down Payment Assistance
Concessions and down payment assistance are separate money and can often be stacked on the same deal. Assistance covers your down payment, and concessions cover your closing costs and prepaids, which together can slash the cash you need at closing. Program rules and lender overlays determine exactly what each can touch, so we map it out before you make an offer, not after.
When to Negotiate Concessions
Concessions make the most sense when the seller has leverage to give, which is exactly the situation in today's slower San Antonio and Hill Country market where homes sit longer. Ask early in the negotiation, tie the concession to the actual closing cost estimate so it is not a round number, and remember that too large a concession can push against the appraisal and the program cap. A reasonable ask beats an aggressive one that kills the deal.
The Closing Cost Math on a Median Home
On a $295,000 median-priced San Antonio area home, buyer closing costs might run an estimated $9,000 to $14,000 before the down payment. A FHA buyer at 3.5% down who also uses down payment assistance could deploy up to about 6% of price in concessions, or roughly $17,700, which would comfortably cover the closing costs and prepaids. That is the difference between needing a large cash pile and walking to closing with far less.
Watch the Net Effect, Not the Gross Number
There is no free lunch: a seller who gives you concessions is often less willing to drop the price, or vice versa. The right way to think about it is net, what you pay all-in for the home including costs, over time. I run the tradeoff both ways so you know which version leaves you better off, which is exactly the honest, on your side analysis you want before you commit.
Nerd Alert
The actual numbers and math behind this topic, the way I run them on the channel.
Let me run the estimate. On a $295,000 purchase where the seller agrees to a 4% concession, that is $11,800 toward your closing costs and prepaids. If your transactional and prepaid costs run roughly $10,000 to $13,000, the concession covers most or all of them, and you arrive with mainly your down payment. On FHA with down payment assistance freeing your 3.5% down, a 6% cap, about $17,700, could cover closing costs plus part of the prepaids entirely.
These program caps are commonly published limits from FHA and VA guidance, and every number here is an estimate for illustration. Your lender confirms the exact cap and what each dollar can cover on your loan before we finalize the concession.
- A 4% VA concession on $295,000 frees about $11,800 of seller money toward your costs.
- A 3% conventional concession on the same price is about $8,850, and the cap may rise with a larger down payment and owner-occupancy.
- Stacking about 3.5% down ($10,325) from a down payment assistance program with a 6% FHA concession ($17,700) can bring your needed cash to a fraction of the all-cash picture.
For a San Antonio buyer the play is simple: in today's buyer-friendly market, seller concessions can cover a large share of your closing costs, and stacked with down payment assistance they can shrink your cash to close dramatically. Know your program cap and make a realistic ask, and that is exactly the kind of negotiation I run on your side.
These are estimates for illustration, not quotes. Figures use publicly available rates and program terms at the time of writing, and your actual rate, fees, and payment depend on your credit file, loan program, and closing date.
