What Are The VA Maximum Seller Concessions?

Quick Summary
VA limits seller concessions to 4% of the home’s reasonable value, as shown on the VA Notice of Value. Normal closing costs and market-rate discount points don’t count toward that limit, so a seller can pay those and still offer up to 4% in concessions for items like the funding fee, prepaid taxes, or a temporary buydown.

Closing Costs vs. Seller Concessions

VA separates what a seller pays into two buckets, and only one has a limit.

Closing costs (no VA limit). A seller can pay all of your normal closing costs, such as:

• Lender origination charges
• The VA appraisal and credit report
• Title insurance, title exam, and recording fees
• Survey and flood determination fees
• Discount points at normal market levels

Seller concessions (capped at 4%). Anything of value beyond normal closing costs counts toward the 4% limit, including:

• Paying your VA funding fee
• Prepaying your property taxes and homeowners insurance
• Funding a temporary buydown, such as a 2-1 buydown
• Paying off a collection, judgment, or other debt so you can qualify
• Discount points beyond normal market levels
• Gifts like appliances or electronics

How the 4% Is Calculated

The 4% is based on the home’s reasonable value from the VA appraisal, called the Notice of Value, not the contract price. If the home appraises for less than the price, the concession limit is based on the lower appraised value.

Concessions can’t come back to you as cash. If the seller credits more than your eligible costs, the extra is typically reduced at closing.

Sources: VA funding fee and closing costs and VA temporary buydown guidance

Example: A $300,000 Home

On a home with a $300,000 reasonable value, concessions can total up to $12,000. Here’s how a seller credit might be structured:

Item	Counts toward 4%?	Amount
Normal closing costs	No	$6,000
VA funding fee (2.15% first use)	Yes	$6,450
Prepaid taxes and insurance	Yes	$3,000
Total seller contribution		$15,450

Only $9,450 counts toward the 4% limit, so this deal still has $2,550 of concession room left. Without the separation between closing costs and concessions, the same credit would look like it broke the limit.

How VA Compares

Loan type	Seller contribution limit
VA	All normal closing costs, plus up to 4% of reasonable value in concessions
FHA	Up to 6% of the sales price, including closing costs
Conventional (primary home)	3% to 9% of the price, depending on down payment, including closing costs

Because VA doesn’t count normal closing costs toward the limit, a VA buyer can often get more total help from a seller than the 4% figure suggests. The seller is not capped at 4% in total. The seller can pay your allowable closing costs plus up to 4% of the home’s reasonable value in concessions.

Tips for Buyers and Agents

• List each item separately in the contract. Spell out closing costs, funding fee, prepaids, and any buydown so the lender can classify each one correctly.
• Plan for the appraisal. Since the 4% is based on the appraised value, a low appraisal also lowers your concession room.
• Talk to your lender before writing the offer. Your loan officer can tell you how much to ask for so none of the credit goes unused.

Frequently Asked Questions

What is the maximum seller concession on a VA loan?

Seller concessions are capped at 4% of the home’s reasonable value from the VA appraisal. Normal closing costs and market-rate discount points don’t count toward that limit.

Does the seller paying the VA funding fee count toward the 4%?

Yes. A seller-paid funding fee counts as a concession and falls under the 4% limit.

Does a temporary buydown count as a seller concession?

Yes. Seller-funded temporary buydowns, such as a 2-1 buydown, count toward the 4% limit.

Can the seller pay all of my closing costs on a VA loan?

Yes. VA doesn’t limit how much of your normal closing costs a seller can pay. Those costs are separate from the 4% concession limit.

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Writing an offer with seller credits? Call me before you submit it, and I’ll help you structure the request so every dollar counts. Call 219-695-0369 or text me at 219-758-8072.

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