Seller Concessions

(Lender’s Handbook, Chapter 8, Topic 5)

Seller concessions include but are not limited to the following:

• payment of the buyer’s VA funding fee
• prepayment of buyer’s property taxes and insurance
• gifts such as a television set or microwave
• payment of extra points to provide permanent interest rate buy-down
• provision of escrowed funds to provide temporary interest rate buy-downs, and
• payoff of credit balances or judgments on behalf of the buyer.

Seller concessions do not include:

• payment of the buyer’s closing costs, or
• payment of points as appropriate to the market.
  Example: If the market dictates an interest rate of 7.5% with 2 discount points, the seller’s payment of the 2 points would not be a seller concession. If the seller paid 5 points, 3 of these points would be considered a seller concession.

(Seller concessions or combinations may not exceed 4% of the reasonable value.)