Seller Concessions and Closing-Cost Credits in Washington: Loan Limits Buyers and Sellers Need (2026)

Short answer: A seller concession (often called a seller credit) is money the seller agrees, in writing, to put toward costs that are usually yours as the buyer—closing costs, prepaids, points. Washington does not set a statewide cap. Your loan program does. On a Fannie Mae conventional loan the ceiling is usually 3%, 6% or 9% of the lower of price or appraisal, depending on your loan-to-value. On FHA it is generally 6% of the sales price. A credit cannot replace your down payment on those programs. Write the amount into the contract, confirm it with the lender before mutual acceptance, and check it again on the Closing Disclosure.

What a seller credit is (and is not)

Fannie Mae’s Selling Guide describes interested party contributions as funds from parties with a stake in the sale—commonly the property seller, builder, developer, or real estate broker—used for costs that are typically the buyer’s. Financing concessions can go toward borrower closing costs and prepaids, or toward HOA assessments after settlement for no more than 12 months. They are not allowed to fund the down payment, reserves, or minimum borrower contribution.

CFPB’s closing guidance gives a practical example: if the seller has not finished a repair you agreed on, the seller might give you money toward closing costs instead of trying to finish the work before closing. That is a credit, not a cash gift in your pocket at the table.

Loan-program ceilings (confirm with your lender)

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Source: Fannie Mae Selling Guide B3-4.1-02 (guide published Nov 4, 2026 on Fannie Mae’s site; topic dated May 7, 2025); HUD Handbook 4000.1 interested-party-contribution section (confirm the current online handbook—section effective dates vary). Percentages are program maximums, not a promise that every lender or every set of closing costs will support that full amount. VA, USDA, jumbo and portfolio loans follow different rules and are not summarized as a hard number here.

When buyers and sellers use a credit

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For sellers, a credit reduces net proceeds the same way a price cut does, dollar for dollar, but it can keep the headline price intact for appraisal and comparable-sale optics. For the math of selling costs in Washington, see our true cost of selling a house in Washington.

How to put a credit in the offer

1. Ask the lender for a usable number first. Get a fee worksheet and the program’s IPC limit for your down payment before you write a dollar amount into the offer.
2. Write the credit into the purchase agreement (or a signed addendum). Vague “seller to help with closing costs” language is easy to misread at escrow.
3. Keep the credit inside actual allowable costs. On a Fannie Mae loan, financing concessions must be equal to or less than the sum of the borrower’s closing costs; anything above is treated as a sales concession. On FHA, excess over allowable costs is an inducement to purchase.
4. Re-check the Closing Disclosure. CFPB says you are not committed until you sign; if the credit or fees look different from what you agreed, pause and ask escrow and the lender. For wire safety at closing, see our closing wire fraud article. For the day-of walk-through, see final walk-through.

FAQ

What is a seller concession or seller credit?

It is money the seller (or another interested party) agrees in writing to put toward costs that are usually the buyer’s, such as closing costs, prepaid taxes and insurance, or discount points. Fannie Mae calls these interested party contributions. CFPB describes seller credits as money toward closing costs, including when a repair will not be finished before closing.

Can a seller credit pay my down payment?

Not on a Fannie Mae loan. Fannie Mae does not permit IPCs to make the borrower’s down payment, meet reserve requirements, or meet minimum borrower contribution requirements. FHA likewise says interested party contributions may not be used for the borrower’s minimum required investment. Gift funds from an acceptable donor are a different tool; see our gift-funds article once it is live, or ask your lender.

How much can a seller credit on a conventional loan?

Under Fannie Mae Selling Guide B3-4.1-02, for a principal residence or second home the maximum financing concession is 3% when LTV/CLTV is above 90%, 6% from 75.01% to 90%, and 9% at 75% or less, measured on the lower of sales price or appraised value. Investment property is capped at 2%. Typical customary seller-paid fees under local custom are not counted toward those maximums. Excess financing concessions are treated as sales concessions and reduce the price used for LTV/CLTV.

How much can a seller credit on an FHA loan?

HUD Handbook 4000.1 allows interested parties to contribute up to 6% of the sales price toward origination fees, other closing costs, prepaid items and discount points. Amounts over actual allowable costs, or over 6%, are treated as an inducement to purchase. Confirm the current handbook text with your lender; handbook sections have their own effective dates.

Does a seller credit show up on my Closing Disclosure?

Yes. Your lender and escrow officer should show credits on the Closing Disclosure. CFPB says to take time reviewing closing documents and to ask questions if anything differs from what you expected. Compare the credit amount and what it pays for against your purchase agreement.

Talk it through with a local agent

Peter Kim and Odigo Real Estate Club help buyers and sellers size a seller credit against the loan’s real limit and the Closing Disclosure, with 25+ years combined experience, 593+ closings, and 122 five-star Zillow reviews. See our home buying services. See our home selling services. Related reading: closing process, earnest money, home inspection, true cost of selling a house in Washington.

Odigo Real Estate Club · REAL Brokerage, WA #112064 · 16108 Ash Way, Suite 201, Lynnwood, WA 98087 · (425) 409-3823 · Mon–Sat 9 AM–6 PM, closed Sunday

Sources

• Fannie Mae, Selling Guide B3-4.1-02, Interested Party Contributions (IPCs) (financing concession limits by LTV/CLTV for principal residence / second home / investment; sales concessions; exclusions), https://selling-guide.fanniemae.com/sel/b3-4.1-02/interested-party-contributions-ipcs , accessed Nov 5, 2026.
• U.S. Department of Housing and Urban Development, FHA Single Family Housing Policy Handbook 4000.1 (interested party contributions up to 6% of sales price; may not fund the borrower’s minimum required investment (MRI)), https://www.hud.gov/program_offices/housing/sfh/handbook_4000-1 , accessed Nov 5, 2026.
• Consumer Financial Protection Bureau, Close the deal (seller credits toward closing costs as an alternative to unfinished repairs before closing), https://www.consumerfinance.gov/owning-a-home/close/close-the-deal/ , accessed Nov 5, 2026.
• Consumer Financial Protection Bureau, Closing Disclosure (reviewing closing documents before you sign), https://www.consumerfinance.gov/owning-a-home/closing-disclosure/ , accessed Nov 5, 2026.

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