What is the maximum seller concession allowed on a conventional loan?

What is the maximum seller concession allowed on a conventional loan?

• A. 6%
• B. 3%
• C. 9%
• D. 4%

Answer: (A)

Concessions are credits the seller can provide to help cover the buyer’s closing costs. For conventional loans, the maximum seller concession is up to six percent of the sale price (or the appraised value if that’s lower). This cap applies to costs like closing costs, prepaid items, and financed points, but it doesn’t cover the down payment. The six percent limit keeps the buyer contributing meaningful funds and protects the lender’s risk in conforming loan programs. If the seller tried to give more, the loan wouldn’t fit standard conventional guidelines. For a concrete example, on a home selling for three hundred thousand, the seller could contribute up to eighteen thousand toward closing costs. Some property types or programs may have different caps, but six percent is the typical limit for conventional loans.

Concessions are credits the seller can provide to help cover the buyer’s closing costs. For conventional loans, the maximum seller concession is up to six percent of the sale price (or the appraised value if that’s lower). This cap applies to costs like closing costs, prepaid items, and financed points, but it doesn’t cover the down payment. The six percent limit keeps the buyer contributing meaningful funds and protects the lender’s risk in conforming loan programs. If the seller tried to give more, the loan wouldn’t fit standard conventional guidelines. For a concrete example, on a home selling for three hundred thousand, the seller could contribute up to eighteen thousand toward closing costs. Some property types or programs may have different caps, but six percent is the typical limit for conventional loans.