Seller Concessions in Utah: What Are They and What Are the Limits?
Seller concessions are negotiated contributions from a home seller toward a buyer’s eligible purchase expenses. They can help cover closing costs, prepaid expenses, or an approved mortgage buydown.
For buyers exploring seller concessions in Utah, the opportunity goes beyond getting a lower asking price. A seller credit could reduce the cash you need at closing or help lower your payment.
However, the maximum depends on your loan program, down payment, and property use.
What can seller concessions pay for?
Depending on your mortgage, seller contributions may cover:
- Loan origination and lender fees.
- Appraisal, title, and settlement costs.
- Prepaid interest and eligible insurance or tax expenses.
- Discount points for a lower interest rate.
- An approved temporary buydown, such as a 2-1 buydown.
The credit must appear in the purchase agreement and closing documents. Your lender then confirms which expenses qualify.
Although buyers often call all seller credits “concessions,” mortgage programs define and count them differently.
What are the maximum seller concessions?
The table below summarizes common purchase-loan limits.
| Loan type and situation | General maximum |
|---|---|
| Conventional primary or second home: less than 10% down | 3% |
| Conventional primary or second home: 10% to less than 25% down | 6% |
| Conventional primary or second home: 25% or more down | 9% |
| Conventional investment property | 2% |
| FHA purchase loan | 6% of the sales price |
| USDA guaranteed purchase loan | 6% of the sales price |
| VA purchase loan | 4% of the home’s reasonable value for defined concessions; ordinary closing costs are treated separately |
For conventional loans, these standard limits use the lower of the purchase price or appraised value. The down-payment examples assume no additional financing changes the combined loan-to-value ratio. Special program exceptions may apply.
Why is the VA rule different?
The VA’s 4% limit is not a blanket cap on everything the seller can pay.
Ordinary buyer closing costs fall outside that limit. Meanwhile, items such as a seller-paid VA funding fee, certain prepaid expenses, and qualifying debt payoffs count toward it.
Therefore, a VA seller contribution can exceed 4% overall when the expenses are structured correctly. Your lender should review the breakdown before your agent writes the offer.
Does the maximum mean you can use that entire amount?
No. The percentage is a ceiling, not an automatic benefit.
For example, a $500,000 conventional purchase with 5% down generally allows up to $15,000 in financing concessions, assuming the appraisal supports the price.
However, you still need enough eligible expenses to use that credit. If your allowable costs total $11,000, you generally cannot collect the remaining $4,000 as spending money.
Before closing, your lender and agent can review whether an approved buydown or contract adjustment makes sense.
Are seller concessions better than a price reduction?
It depends on your goal.
A price reduction lowers the purchase price and generally reduces the amount you borrow.
A seller credit helps cover eligible expenses. That may preserve your savings or fund a buydown.
For example, if you have enough for the down payment but closing costs would drain your reserves, a credit may be especially useful. However, if reducing the loan balance is your priority, a lower price may fit better.
Compare both options using the cash needed at closing, monthly payment, and total costs.
Can seller concessions cover my down payment?
Generally, ordinary seller closing-cost credits cannot satisfy your required down payment. A qualifying family gift of equity is a separate arrangement with its own rules.
Also, the seller must agree to contribute. Loan guidelines establish what is permitted; negotiations determine what you receive.
Plan your seller concessions before making an offer
The strongest request starts with knowing how much credit you can actually use.
Our Houzd Mortgage team can work with you and your real estate agent to compare seller concessions in Utah, review program limits, and evaluate closing-cost or buydown options.
Before writing your offer, let’s run the numbers so you can ask for a credit that supports your goals.
Seller contributions are subject to loan guidelines, eligible expenses, appraisal, and underwriting approval. Limits may include contributions from other interested parties.