Closing cost credits vs seller concessions
They're not identical. Closing cost credits can cover standard loan costs. Seller concessions, as the VA defines them, include things like paying the funding fee, prepaid taxes and insurance, or paying off a buyer's debts.
The 4% concession limit
According to the VA, seller concessions generally can't exceed 4% of the reasonable value of the home. Other eligible closing cost credits may not be subject to the same limit. Your lender applies the exact rules to your contract.
Nothing is automatic
Whether a seller contributes depends on your offer, the market and negotiation. Your agent and lender can help structure a request that fits VA rules.
California considerations
In competitive California neighborhoods, sellers may be less willing to give credits. In slower markets or with new construction builders, credits may be easier to negotiate. Every transaction is different.
What Eileen can help with
- Estimating your closing costs
- Explaining how a credit request fits VA limits before you write an offer
- Working with your agent on offer structure
Frequently asked questions
- Does the VA require sellers to pay closing costs?
- No. The VA sets limits on what sellers may pay, but sellers aren't required to pay anything.
- Are VA closing costs the same as with other loans?
- The VA limits some fees a borrower can be charged, but closing costs still vary by lender, property and location.