On a VA loan, sellers can contribute up to 4% of the purchase pricetoward the buyer's costs. This covers the VA funding fee, prepaid taxes and insurance, discount points, and even payoff of buyer debts. Importantly, normal closing costs (appraisal, title, origination) are paid separately and do NOT count toward the 4% cap — so the seller's total contribution can actually exceed 4% when closing costs are included.
How Do VA Seller Concessions Work?
Seller concessions are negotiated as part of the purchase contract. The buyer asks the seller to pay certain costs, and if the seller agrees, those amounts are deducted from the seller's proceeds at closing. The buyer gets into the home with less cash out of pocket.
The VA's 4% rule applies to a specific category of costs called "seller concessions," which the VA defines as anything above and beyond the buyer's normal closing costs. Understanding what falls inside vs outside the 4% cap is critical:
Counts Toward 4% Cap
- VA funding fee payment
- Prepaid property taxes
- Prepaid homeowner's insurance
- Prepaid HOA dues
- Discount points (rate buydown)
- Payoff of buyer's debts or judgments
- Gifts (appliances, etc.)
Does NOT Count (Seller Can Pay On Top)
- Buyer's origination fee
- VA appraisal fee
- Credit report fee
- Title insurance
- Recording fees
- Survey costs
- Hazard insurance at closing
This distinction is important because it means the seller's total contribution to the buyer can significantly exceed 4%. On a $400,000 home, the seller could pay $16,000 in concessions (4%) plus another $5,000-$8,000 in normal closing costs — a total contribution of $21,000-$24,000.
How Do VA Concession Limits Compare to Other Loan Types?
| Loan Type | Seller Concession Limit | What It Covers |
|---|---|---|
| VA | 4% of purchase price | Funding fee, prepaids, discount points, buyer debt payoffs (closing costs are extra) |
| FHA | 6% of purchase price | Closing costs, prepaids, discount points, MIP payment |
| Conventional (<10% down) | 3% of purchase price | Closing costs and prepaids only |
| Conventional (10-25% down) | 6% of purchase price | Closing costs and prepaids only |
| Conventional (25%+ down) | 9% of purchase price | Closing costs and prepaids only |
While VA's 4% number appears lower than FHA's 6%, the VA's treatment of closing costs is different. Because normal closing costs do not count toward the VA 4% cap, the effective total seller contribution for VA buyers is often comparable to or higher than FHA.
How Do You Negotiate Seller Concessions in Tampa Bay?
Whether you can get seller concessions depends heavily on market conditions and how the offer is structured. Here are strategies that work:
- Ask for concessions on homes with higher days on market. A home that has been listed for 30+ days is more likely to have a motivated seller willing to contribute toward your costs.
- Offer full asking price with concession request. A clean offer at list price with a 3-4% concession request is often more attractive to sellers than a lowball offer with no concessions.
- Focus the concession on the funding fee.Asking the seller to cover the VA funding fee is a specific, defensible request that sellers understand. It is easier to negotiate a defined amount than a vague "closing cost credit."
- Use the buyer's market advantage.When inventory is high and days on market are climbing, sellers are more receptive to concession requests. Your agent's market knowledge matters here.
- Consider rate buydowns. Instead of asking for a price reduction, ask the seller to pay discount points. A 1-point buydown (1% of loan amount) can reduce your rate by ~0.25% — saving you money every month for the life of the loan.
Want Help Negotiating Seller Concessions?
Barrett Henry (MRP) has 23+ years of real estate experience and negotiates VA transactions across Tampa Bay. Get concessions that save you real money.
What Are Sellers NOT Allowed to Pay?
There are limits to what sellers can contribute, even within the 4% allowance:
- Anything above 4% of the purchase price (in the concession category). If the concession exceeds 4%, the excess is deducted from the loan amount.
- Commission bonuses or incentives to the buyer's agent — these are separate from buyer concessions and handled through listing agreements.
- Cash-back to the buyer — the seller cannot give the buyer money outside of closing. All contributions must flow through escrow.
What Does a Seller Concession Look Like on a Real Deal?
Example — $375,000 Home in Riverview:
- Purchase price: $375,000
- Max 4% concession: $15,000
- VA funding fee (2.15%): $8,063 — seller pays ✓
- Prepaid taxes + insurance: $3,200 — seller pays ✓
- Discount point (0.25% rate buydown): $3,750 — seller pays ✓
- Total concessions used: $15,013 (within 4% cap)
- Seller also pays buyer's closing costs: $6,500 (does NOT count toward 4%)
- Total seller contribution: $21,513
In this example, the VA buyer moves into a $375,000 home with virtually zero out of pocket. The seller's total contribution exceeds 5.7% of the purchase price, but it is structured to comply with VA rules because normal closing costs are separate from the 4% concession cap.
I'm Barrett Henry — a Military Relocation Professional (MRP) and Broker Associate with REMAX Collective. I help Tampa Bay veterans negotiate seller concessions that keep more money in their pockets. With 23+ years of real estate experience, I understand how to structure VA offers that sellers accept. Learn more about what sellers can pay at the U.S. Department of Veterans Affairs.
Related VA Loan Guides
What can you afford with a VA loan?
VA loans allow $0 down with full entitlement
Tampa Bay avg: ~1.2% tax + ~0.8% insurance
Estimated Monthly Payment (PITI)
$2,796
Educational estimate only. 30-year fixed, no PMI (VA benefit). Does not include VA funding fee or HOA dues.
See full affordability calculator →Ready to get started?
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Frequently Asked Questions
How much can a seller contribute toward a VA buyer's costs?
Sellers can pay up to 4% of the purchase price in concessions toward a VA buyer's costs. On a $400,000 home, that is up to $16,000. This can cover closing costs, the VA funding fee, prepaid taxes and insurance, discount points to buy down the interest rate, and payoff of the buyer's judgments or debts.
What is included in the 4% seller concession limit for VA loans?
The 4% cap covers items that go beyond the buyer's normal closing costs. This includes payment of the buyer's VA funding fee, prepaid items (taxes, insurance, HOA dues), discount points to buy down the rate, and payoff of the buyer's debts or judgments. Normal closing costs like the appraisal fee, title insurance, and origination charges do NOT count toward the 4% cap — the seller can pay those on top of the 4%.
Can the seller pay the VA funding fee?
Yes. The VA funding fee is one of the most common items covered by seller concessions. On a $400,000 home with a first-time use funding fee of 2.15%, the fee is $8,600 — well within the 4% concession limit of $16,000. Having the seller cover the funding fee means the buyer does not need to finance it into the loan or pay it out of pocket.
Do seller concessions affect the appraisal?
Seller concessions do not directly affect the VA appraisal value. The appraiser assesses the home's market value independent of any concession agreements. However, if the sales price is inflated to accommodate large concessions, the appraisal may come in below the contract price, which can create issues. Barrett Henry (MRP) helps structure offers to avoid this problem.
Are sellers required to pay concessions for VA buyers?
No. Seller concessions are entirely negotiable. The seller has no obligation to pay any of the buyer's costs. In a strong seller's market, sellers may refuse concessions. In a balanced or buyer's market, concessions are commonly offered and accepted. Your REALTOR's negotiation strategy plays a major role in whether concessions are included in the deal.