Seller concessions in Texas: how to get the seller to help pay your costs

What a seller concession is

A seller concession is money the seller agrees to put toward your costs of buying the home, credited to you at closing.

When you buy a home, the price isn’t the only check you write. There are lender fees, title charges, a survey, and a stack of prepaid items: the first year of homeowners insurance, a few months of property taxes to start your escrow account, and interest through the end of the month. In Texas, where property taxes and insurance both run high, those prepaids alone can surprise people.

A seller concession shifts part of that bill to the seller. You negotiate it in your offer, it’s written into the contract, and it appears as a credit on your closing statement. The price stays the same; the cash you bring to closing goes down.

Lenders call these “interested party contributions,” because the rules apply to anyone with a stake in the sale: the seller, a builder, or a real estate agent.

Why they’re back in Texas

Texas has shifted toward buyers, and in a buyer’s market sellers often help with costs to close a deal.

For several years, asking a seller to pay your closing costs could cost you the house. That market is gone in most of Texas. Listings rose in most of the state’s metro areas in the third quarter of 2026, homes are taking longer to sell, and sellers who have watched their listing sit are open to terms they wouldn’t have discussed in 2021.

That changes the negotiation. Instead of only asking “will they come down on price,” it’s worth asking “what would help me most at closing,” because the answer is often a credit rather than a lower price.

The practical move — Talk to your loan officer before your agent writes the offer. Knowing your actual closing costs lets you ask for a specific, usable number instead of a guess.

The limits by loan type

The loan program, not Texas law, sets the maximum a seller can contribute.

Every major loan program caps seller contributions so that a credit can’t quietly inflate a home’s price. The caps are different for each program, and they are measured against the price or appraised value, not your loan amount.

Loan type	Maximum seller contribution
FHA	Up to 6% of the sales price toward closing costs, prepaids and discount points
VA	Normal closing costs: no limit. Other concessions (such as the funding fee): up to 4% of reasonable value
Conventional, primary or second home, loan-to-value above 90%	3%
Conventional, primary or second home, loan-to-value 75.01% to 90%	6%
Conventional, primary or second home, loan-to-value 75% or less	9%
Conventional, investment property	2%

Conventional limits shown are Fannie Mae’s, calculated on the lower of the sales price or appraised value. Individual lenders can be stricter, and requirements vary by program. As a broker, we compare several lenders to find the best fit.

A few details worth knowing:

• FHA counts discount points, temporary buydowns and the upfront mortgage insurance premium inside the 6%. The seller’s payment of agent commissions customarily paid by sellers does not count.
• VA separates two buckets. A seller can pay all of a veteran’s normal closing costs without limit. The 4% cap applies to extras, such as paying the VA funding fee, paying off a buyer’s debt, or prepaying hazard insurance.
• Conventional limits depend on loan-to-value, the loan amount as a share of the home’s value. Your loan officer will tell you which tier your loan falls in.

What concessions can and can’t pay for

Concessions can cover closing costs, prepaids and rate buydowns, but never your down payment or cash back to you.

They can usually cover:

• Lender fees — origination, underwriting, appraisal and credit report
• Title and settlement costs — title insurance, escrow fees, recording and survey
• Prepaid items — homeowners insurance, initial escrow deposits for taxes and insurance, and prepaid interest
• Discount points or a temporary buydown — to lower your rate permanently or for the first years of the loan

They can’t cover:

• Your down payment — every major program prohibits it
• Required reserves — savings you must show after closing
• Cash to you — any amount above your actual costs doesn’t come back to you as money

That last point catches people. If the contract says the seller will pay up to a certain amount and your real costs come in lower, the difference is typically lost, or the contract has to be amended. Asking for more than you can use doesn’t help you.

Credit or price cut: which is worth more?

A credit saves cash at closing; a price cut saves a little on every payment, and which matters more depends on your cash position.

Suppose a seller is willing to give up the same amount either way. A price reduction lowers your loan amount by that much, which trims your monthly payment slightly over many years. A credit puts the full amount toward costs you would otherwise pay in cash at closing.

• Short on cash to close? A credit usually does more for you, because it lowers what you have to bring on closing day.
• Plenty of cash and planning to stay a long time? A lower price may be worth more over the life of the loan.
• Planning a buydown? A credit can fund one, and in some cases a lower rate saves more than the same amount off the price.

One Texas-specific wrinkle: Texas doesn’t require sale prices to be publicly disclosed, and appraisal districts set taxable value on their own. Don’t assume a lower purchase price will lower your property tax bill.

Ask for both comparisons — Before you settle on a counteroffer, we can show you the cash-to-close and long-term cost of a credit, a price cut, and a buydown side by side.

How to write it into a Texas contract

In the standard Texas resale contract, the seller agrees to pay up to a set dollar amount toward the buyer’s expenses.

The Texas Real Estate Commission’s One to Four Family Residential Contract (Resale), the form used in most Texas home sales, has a section on settlement and other expenses. That’s where your agent fills in the maximum dollar amount the seller will contribute toward your costs.

Three habits make that number work:

1. Use a dollar amount you can actually spend. Base it on your Loan Estimate, not a round number.
2. Stay inside your program’s cap. An amount over the limit has to be cut back, or it reduces the price the lender uses for underwriting.
3. Make sure the home appraises. If you raise your offer to make room for a credit, the appraisal has to support the higher price. If it comes in low, the lender uses the lower value.

New construction works differently. Builders usually write incentives into their own contracts, and they often tie them to their preferred lender. You are not required to use the builder’s lender, so compare the full offer, not just the incentive.

Repairs, credits and the inspection

After the inspection, a repair credit generally has to be applied to closing costs, not paid to you in cash.

Texas buyers often renegotiate after the inspection, through an amendment to the contract. Asking the seller for a credit instead of repairs can make sense, especially for work you’d rather choose your own contractor for.

Lenders generally treat that credit the same as any other concession: it has to go toward allowable closing costs and stay within the program limit. It can’t be handed to you as repair money at closing.

Check before you sign the amendment — If your closing costs are already covered by an earlier credit, a second credit may have nowhere to go. A quick call to your loan officer avoids leaving money on the table.

How to get started

A Loan Estimate before you make an offer tells you exactly how much seller help you can use.

Before you tour your next home, call us for a pre-approval and an estimate of your closing costs and prepaids. We’ll tell you which program limit applies to you, how much credit you can actually use, and whether a buydown or a closing-cost credit makes more sense for your plans. Start with our FHA, VA or conventional loan pages, or estimate a full payment with our mortgage payment calculator.