The seller
The usual source, negotiated into the purchase and sale agreement and paid at the settlement table.
Interested party contributions
How much the seller is allowed to pay for you
Every programme caps what an interested party may contribute, and the cap moves with your down payment. Go past it and underwriting simply cuts it back.
Find your ceiling
The cap is a percentage, not a number
Choose the programme and move the down payment slider. On a conventional purchase the cap triples between 5% down and 25% down.
Your contract
$
The conventional cap steps at 10% and again at 25% down. The other programmes use a flat cap.
Sample figures. The closing package is estimated at 2.4% of the price, a typical Greater Boston range once title, recording, transfer stamps and prepaids are counted.
Most the seller may legally contribute
$41,100
6% of the contract price · LTV 75.01% to 90%
- Estimated closing package
- $16,440
- Down payment required
- $68,500
- Left for you to bring
- $0
The cap covers the whole estimated closing package with $24,660 to spare, which can fund a temporary buydown or discount points rather than being left on the table.
A credit written above the cap is reduced to the cap at underwriting. The excess is not refunded to you, so negotiate to the cap, not past it.
What a concession may pay for
- Origination and discount points
- Appraisal, credit and flood fees
- Title insurance and settlement fees
- Recording and transfer stamps
- Prepaid interest, taxes and hazard
- Funding the escrow account
- A 2-1 temporary rate buydown
- FHA upfront MIP or the VA funding fee
What it may never pay for
- Any part of the required down payment on a conventional, FHA or USDA loan
- Cash back to the buyer at the closing table
- Repairs paid outside closing and left off the settlement statement
- Anything above the programme cap, which is cut to the cap and the rest is lost
| Programme | Occupancy | Cap | How the cap is set |
|---|---|---|---|
| Conventional, primary residence | Primary or second home | 3 / 6 / 9% | The cap steps with loan-to-value: 3% while you are under 10% down, 6% from 10% to 25% down, 9% once you put at least 25% down. |
| Conventional, investment property | Non-owner occupied | 2% | Investment purchases are capped at 2% of the contract price at every loan-to-value. |
| FHA | Primary residence | 6% | FHA allows up to 6% of the sales price toward closing costs, prepaids, discount points and the upfront mortgage insurance premium. |
| VA | Primary residence | 4% | VA caps seller concessions at 4% of the reasonable value. Customary closing costs the seller pays are counted separately and do not use up the 4%. |
| USDA Guaranteed | Primary residence | 6% | USDA allows up to 6% of the sales price toward eligible closing costs, prepaids and the guarantee fee. |
Scroll the table sideways
Who counts as interested
Four sources, one shared cap
Contributions are added together. A builder incentive plus an agent rebate can breach the cap on their own, with no seller credit involved at all.
The listing or buyer's agent
A commission rebate is an interested party contribution and counts against the same cap. It must be disclosed on the Closing Disclosure.
The builder or developer
New construction incentives, including a builder's own rate buydown, are counted in full against the cap.
An affiliate of any of them
A title company, a relocation firm or a lender owned by an interested party. Relationship, not intention, is what makes a contribution interested.
Getting the offer right
We will review the credit language before your agent submits it, so the offer is written to the cap that applies to the loan you are actually using.
No, and the difference matters. A $15,000 price cut lowers your loan and your monthly payment slightly. A $15,000 credit leaves the price where it is and hands you the cash to close. If you are short on cash, take the credit. If you are short on income, take the price cut.
Underwriting reduces it to the cap. The excess is not paid to you, not applied to principal and not refunded to the seller at closing unless the contract is amended first. Write the credit at or below the cap, and amend the contract if the loan type changes.
Not on a conventional, FHA or USDA purchase. The down payment must come from your own funds or an eligible gift. Interested party contributions are for closing costs, prepaids, points and escrow funding only.
Yes. A large concession is a sale condition and the appraiser must consider it when judging whether the contract price reflects market value. An unusually large credit can produce an appraisal at less than the contract price, which then drives the loan amount down.
Usually a permanent buydown with discount points, or a 2-1 temporary buydown if you expect to refinance. Both spend the credit on the rate rather than on fees you would have paid anyway, and both are permitted uses under every programme on this page.
Write the offer to the cap, not past it
Tell us the price and the programme and we will give your agent the exact credit figure to write, plus what it should be spent on.
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