Short Answer
A seller credit is an agreement where the seller pays a portion of the buyer's closing costs at settlement. For example, you might offer $400,000 with a $10,000 seller credit, meaning the seller contributes $10,000 toward your closing costs. The credit reduces your cash needed at closing. There are limits on how much sellers can contribute based on your loan type, typically 3% to 6% of the purchase price.
Seller credits are a common negotiating tool that can reduce your out-of-pocket costs at closing. The credit is applied at closing, reducing the amount you need to bring. Seller credits can be used for lender fees, title insurance, attorney fees, prepaid property taxes, and other closing costs. They cannot be used for your down payment. The maximum seller credit depends on your loan type. Conventional loans allow 3% if your down payment is less than 10%, 6% if your down payment is 10% to 25%, and 9% if your down payment is over 25%. FHA loans allow up to 6%. VA loans allow up to 4%. USDA loans allow up to 6%. When negotiating a seller credit, the offer price typically increases to offset the credit. The seller nets the same amount, and you reduce your cash to close. Make sure the home appraises for the higher price. Your agent will help you structure the credit to maximize your benefit while keeping the offer attractive.
Bob's Advice
Redfin Senior Agent · AI Certified Agent
Seller credits are one of the most practical ways to reduce your cash needed at closing. I have helped many buyers negotiate credits that covered most or all of their closing costs. The key is working with an agent who knows how to structure the offer so the seller nets what they want while you get the credit you need.
Related Questions
Ready to Take the Next Step?
Every situation is unique. Let us talk about your specific goals and create a plan that works for you.