Seller-contribution quick reference
| Loan / occupancy | Published limit | Calculation base / distinction |
|---|---|---|
| Conventional: primary / second home, LTV/CLTV above 90% | 3% | Lower of sale price or appraised value |
| Conventional: primary / second home, LTV/CLTV 75.01–90% | 6% | Lower of sale price or appraised value |
| Conventional: primary / second home, LTV/CLTV 75% or less | 9% | Lower of sale price or appraised value |
| Conventional: investment property | 2% | Lower of sale price or appraised value |
| FHA | 6% | Sales price |
| VA | 4% for defined seller concessions | VA reasonable value; ordinary closing-cost credits are treated separately |
| USDA Guaranteed | 6% | Sales price; program exclusions apply |
Conventional rows summarize Fannie Mae guidance; confirm the selected investor’s rules. LTV means loan-to-value; CLTV includes applicable subordinate financing. These are program ceilings, not a promise that a seller will contribute or that every charge qualifies.
Why VA’s 4% rule needs context
VA distinguishes defined seller concessions from ordinary buyer closing costs. Its 4% ceiling applies to concessions such as funding-fee credits, certain prepaid items and debt payoff; it is not a blanket 4% limit on all seller-paid closing costs. Have the lender classify the proposed items.
Conventional example: check the base
At a $400,000 price and $400,000 appraisal, a qualifying primary-residence transaction with 90% LTV/CLTV has a 6% ceiling, or $24,000. If eligible buyer costs total $12,000, that ceiling does not make the extra $12,000 cash available to the buyer. A lower appraisal or subordinate financing can change the analysis.
Before the offer is finalized
- Confirm program, occupancy, value and LTV/CLTV.
- List the costs the credit is intended to cover.
- Ask how buydowns, lender credits and assistance interact with the transaction.
- Have the lender check any agent compensation or rebates separately; treatment is not identical across programs.
- Revisit the figures after the appraisal and final fee information.
Questions clients ask
Can unused seller credits become cash back?
Do not assume so. Permitted uses and excess-credit treatment depend on the program and actual closing figures.
Can a conventional seller credit replace the down payment?
Fannie Mae does not permit interested-party contributions to supply the down payment, reserves or minimum borrower contribution. Discuss separately permitted sources with the lender.
Sources and editorial information
Published by The Rice Financial Group. Editorial update: October 14, 2026. How we prepare our resources.
- Fannie Mae: interested party contributions
- HUD: seller and interested party contributions
- VA: funding fee and closing costs
- USDA: Guaranteed Loan Program, Chapter 6
Educational information, not an approval, rate quote or commitment to lend. Program rules, pricing and availability can change. Confirm the requirements for your borrower, property and transaction with the mortgage team.
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