If you’re using an FHA loan to buy a home, you might be able to lower your out-of-pocket costs by asking the seller to help pay some of your expenses.
This is known as a seller concession in the real estate world, and it’s a common strategy—especially for first-time buyers working with a tight budget.
But how do you actually ask for a seller concession when using an FHA loan, and when does it make sense to do so?
In this guide, you will learn:
- What the FHA allows when it comes to seller concessions
- A simple, step-by-step process for how to request a concession
- How local housing market conditions can influence the seller’s response
What Are the Rules for Seller Concessions on FHA Loans?
The FHA allows sellers to contribute up to 6% of the home’s sale price toward the buyer’s closing costs, prepaid expenses, discount points, and other allowable fees.
Here are the key rules for FHA loans:
- Maximum limit: The total seller contribution can’t be more than 6% of the home’s sale price.
- What it can cover: Things like loan origination fees, title insurance, recording fees, upfront mortgage insurance premiums, and more.
- What it can’t cover: The actual down payment (usually 3.5%). You still need to bring that yourself or use gift funds or a down payment assistance program.
Example: If you’re buying a $300,000 home with an FHA loan, the seller can contribute up to $18,000 (6%) to help with your closing costs. But they cannot pay your 3.5% down payment ($10,500).
Step-by-Step: How to Ask for a Seller Concession
Note: The process of requesting a seller concession can vary from one situation to the next, for a number of reasons. But it usually includes the following steps.
Step 1: Talk to Your Lender First
Before asking the seller for anything, talk to your lender. They’ll estimate your closing costs and help you figure out how much you might want to ask for in seller concessions.
Ask your lender:
- “Can you give me a rough estimate of total closing costs?”
- “What kinds of costs can be covered by seller contributions?”
Step 2: Work With Your Real Estate Agent
Let your agent know you want to ask for seller concessions. They’ll help you word the offer correctly and make sure it’s appropriate for the home and market you’re dealing with.
Your agent will help you:
- Decide how much to ask for (typically $3,000 to $10,000)
- Include the right language in the offer
- Make sure the seller is still likely to consider it
Step 3: Include the Request in Your Offer
Seller concessions must be included in the purchase contract. You’ll need to clearly spell out the amount you’re asking the seller to pay toward your costs.
Here’s a standard example of the language used in many FHA purchase offers:
“Seller to contribute up to $7,500 toward buyer’s closing costs, prepaid items, and other allowable costs.”
Your real estate agent or attorney will know the exact format or legal language required in your area, but this gives you the general idea.
Step 4: Be Prepared for Negotiation
The seller might accept your offer as-is. But it’s also common for them to counteroffer, either by reducing the concession amount or raising the purchase price slightly to offset their costs.
Here are some possible outcomes:
- Seller agrees to the full concession
- Seller counters with a lower concession
- Seller asks for a higher purchase price to balance the concession
- Seller says no, especially in a competitive market
As a home buyer, you should have a plan for all of these different scenarios, so you can move forward in a timely fashion.
Step 5: Finalize With Your Lender
Once the contract is accepted and the seller concession is agreed upon, send the signed contract to your lender. They’ll make sure everything is accounted for in your loan estimate and closing documents.
Local Market Conditions Matter
Whether or not a seller agrees to pay part of your costs has less to do with FHA rules and more to do with how competitive the housing market is.
In a hot market (seller’s market):
- Homes sell quickly, often with multiple offers
- Sellers are less likely to offer concessions
- You may need to make a clean offer (no extra requests) to stay competitive
Seller’s View: “Why should I give you a $10,000 credit when another buyer is offering me the same price with no concession request?”
Buyer Considerations: Asking for a concession in a hot market can make your offer less competitive. If you need a concession, you might have to increase your offer price to compensate the seller for what you’re requesting. So tread carefully.
In a cooler market (buyer’s market):
- Homes stay on the market longer
- Sellers may be more open to concessions just to get the deal done
- Asking for 3%–6% in concessions is more common and more likely to succeed
Seller’s View: “Giving a credit for closing costs might be what it takes to get this house sold and allows more buyers to afford my home.”
Buyer Considerations: In a buyer’s market, requesting a seller concession is common and often expected. You have much more leverage to ask for a reasonable amount to cover your closing costs without necessarily having to raise your offer price.
How to Know What Kind of Market You’re In:
- Ask your real estate agent about local market conditions and leverage.
- Look at how long homes are staying on the market in your area.
- See if sellers are dropping prices or offering credits in other listings.
Final Thoughts
Seller concessions can be a powerful tool for FHA buyers who need help covering closing costs.
But they aren’t guaranteed. Whether or not you get a concession depends on the market, the property, and how you structure your offer.
To boost your chances for success:
- Talk to your lender and agent early
- Be realistic in your request
- Understand the seller’s position and the local market conditions
Even if a seller won’t agree to cover your costs, your agent and lender may help you explore other options—like negotiating a lower price or using a down payment assistance program.
Disclaimer: This guide was created for educational purposes only and does not constitute legal or financial advice. Your situation may differ from the examples presented above. Consider seeking advice from your agent or lender before requesting concessions on an FHA loan.