What is the maximum allowable seller concession in most loan programs?

Seller concessions refer to the financial contributions that a seller can provide to the buyer to help cover closing costs associated with a loan. In most loan programs, including FHA and conventional loans, the maximum allowable seller concession is typically set at 6% of the purchase price. This means that the seller can contribute this percentage toward the buyer’s closing costs, which may include items like loan origination fees, title insurance, appraisal fees, and other associated costs. The allowance of 6% aims to help buyers reduce their out-of-pocket expenses when purchasing a home, making it more affordable for them to enter the housing market.

By adhering to this limit, loan programs maintain a balance between assisting buyers and ensuring the integrity of the loan by minimizing risk for lenders. Ensuring seller concessions remain within an established threshold helps prevent over-inflating the selling price of the property and encourages proper valuation in the market.