A seller can pay a VA buyer’s normal closing costs and also provide seller concessions of up to 4% of the home’s VA-established reasonable value. The 4% limit applies to specific concessions, not every dollar the seller contributes.
Updated September 28, 2026.
For a Veteran buying in Melbourne, Brevard County, or elsewhere in Florida, this distinction matters when planning cash to close. Start with the expenses you need help covering, then have your lender classify them before your agent negotiates the credit.
How does the VA 4% seller-concession rule work?
Multiply the reasonable value shown on the VA Notice of Value (NOV) by 4%. Do not automatically use the contract purchase price or the loan amount.
Example: $400,000 reasonable value × 4% = $16,000 maximum in concessions subject to the cap. Eligible normal closing costs can be paid separately.
VA’s funding fee and closing-cost guidance confirms that closing-cost credits have no VA percentage limit, while seller concessions cannot exceed 4% of reasonable value. That does not create an unrestricted cash allowance: the costs and credits still need to fit the transaction and receive lender approval.
Which seller-paid costs count toward the 4% limit?
VA uses a narrower definition of seller concessions than everyday real estate conversations often do. The key is what the seller pays for, not simply whether the contract calls the amount a seller credit.
| Payment by the seller | Counts toward 4%? |
|---|---|
| Normal buyer closing costs, such as eligible appraisal, title, recording, and loan fees | No |
| Discount points appropriate to the market | No |
| The buyer’s VA funding fee, when owed | Yes |
| Prepayment of the buyer’s property taxes or homeowners insurance | Yes |
| Extra points for a permanent buydown, or seller-funded temporary buydown funds | Yes |
| Payoff of buyer credit balances or judgments; qualifying gifts or incentives | Yes |
Source: VA Lenders Handbook, Chapter 8, Topic 5. Your lender should review the specific charges, including tax adjustments and builder incentives, rather than classify everything by a broad label.
There is no universal two-point cutoff
Normal, market-appropriate discount points are excluded from the cap; extra points for a permanent rate buydown count. The handbook’s two-point illustration is an example, not a rule that every point above 2% is automatically a concession. Ask your loan officer to explain the classification for your loan.
Temporary buydowns require a separate affordability check
A seller-funded temporary buydown uses funds set aside to reduce your payments for a limited period. It counts toward the concession cap. Budget for the full payment after the subsidy ends, and ask how you must qualify. See VA’s temporary buydown guidance.
A dollar example: can the seller pay more than 4% total?
Yes, when part of the contribution pays eligible normal closing costs outside the concession cap. Consider this simplified example:
- VA reasonable value: $400,000.
- Concession limit: $16,000.
- Seller-paid normal closing costs: $9,000, outside the cap.
- Seller-paid concessions: $12,000 in approved items that count toward the cap.
- Total seller assistance: $21,000, with only $12,000 tested against the $16,000 limit.
The total is 5.25% of reasonable value, but the concessions subject to the cap are 3%. This illustrates why a blanket “the seller can only pay 4%” answer can be misleading.
If the NOV instead establishes a value of $380,000, the concession ceiling is $15,200. Any difference between contract price and reasonable value also needs a separate discussion with your lender and agent.
Illustration only. These amounts are not typical-cost estimates, a Loan Estimate, an offer, or a guarantee of approval. Actual charges, available credits, and their permitted use vary.
Make your seller-credit request specific.
Ask a Morgan Financial loan officer to separate your estimated closing costs from concessions before you make an offer.
How to plan a seller-credit request
Use an itemized estimate to guide the negotiation. Asking for the maximum without a plan can leave you with a credit that does not match your actual expenses.
- List the costs. Ask for estimated loan charges, title expenses, prepaids, and any funding fee. Include amounts you may need to pay before closing.
- Confirm your funding-fee status. Some borrowers are exempt. Verify whether a fee is owed before allocating seller assistance to it.
- Separate the categories. Have the lender identify normal closing costs and the concessions that use the 4% allowance.
- Compare the alternatives. Ask for a side-by-side estimate of a seller credit, a lower price, and any buydown option. Compare cash to close and the full ongoing payment.
- Document and recheck. Work with your agent on the written offer. Revisit the credit after the appraisal and as final costs become available; review the Closing Disclosure before signing.
For a Florida purchase, obtain property-specific insurance and tax estimates early. Do not assume a previous owner’s bill reflects your future costs. For broader planning, explore our homebuying resources and VA home loan resources.
VA seller-concession FAQs
Does the seller have to give me 4%?
No. The cap is a program limit, not a required seller contribution. The amount you request and the amount the seller accepts are part of the negotiation.
Can the seller pay my VA funding fee?
Yes. When a funding fee is owed and the seller pays it, that payment counts toward the 4% concession limit. First confirm whether you qualify for an exemption.
Can I receive an unused seller credit as spending money?
Do not plan on that. Ask your lender and closing agent how any excess credit must be handled before closing. A negotiated credit should be matched to permitted costs; it is not a promise of cash back.
Does seller assistance guarantee a no-cash closing?
No. Your cash needs depend on the actual costs, the negotiated credit, the property value, and your loan requirements. Ask for a written cash-to-close estimate and confirm which expenses are payable earlier.
Review your VA purchase options with Morgan Financial
Before you negotiate, bring your estimated price, available cash, and seller-credit questions to a loan officer. Morgan Financial can help you review how the proposed credit fits your VA purchase and what you may still need at closing.
Talk with Morgan Financial about your VA home purchase.
This article is for educational purposes only and is not financial, legal, tax, or insurance advice or a commitment to lend. Loan approval, terms, and program eligibility depend on borrower, property, lender, and program requirements. Verify current requirements with a licensed mortgage professional and the relevant government agency.
Morgan Financial | NMLS #318525 | Equal Housing Lender. Morgan Financial is not affiliated with or endorsed by the U.S. Department of Veterans Affairs or any government agency.
