Seller Credits in 2026: How Much Can a Homebuyer Actually Receive?
Fannie Mae caps seller-paid closing help at 2% to 9% of the lower of price or appraisal, depending on occupancy and down payment. Here's how the limits work, what the money can't pay for, and how to size a credit before you sign.
By Anthony Brikho · 5 min read
When a buyer asks a seller to "cover closing costs," the deal usually turns into a dollar figure on the purchase contract. On a conventional loan, though, how much the buyer can actually use depends on Fannie Mae's rules for interested party contributions (IPCs). These rules are not new. The current version of Selling Guide section B3-4.1-02 is dated May 7, 2025. Nothing changed in November. But sellers are offering more help in 2026, so it pays to know the limits before you sign.
Who counts as an interested party
Fannie Mae defines IPCs as money from third parties with a vested interest in the sale, such as the seller, builder, developer or real estate agent, used to pay costs that are normally the buyer's. The guide splits them into two types. Financing concessions pay the buyer's closing costs, including prepaids, or up to 12 months of homeowners' association dues after closing. Sales concessions are things like cash gifts, furniture, moving allowances and other giveaways, plus any financing concessions above the limit.
The limits
The maximum depends on occupancy and the loan-to-value (LTV) or combined loan-to-value (CLTV) ratio:
| Occupancy | LTV/CLTV | Maximum |
|---|---|---|
| Principal residence or second home | Above 90% | 3% |
| Principal residence or second home | 75.01%–90% | 6% |
| Principal residence or second home | 75% or less | 9% |
| Investment property | All ratios | 2% |
The percentage is applied to the lower of the sales price or the appraised value, not the loan amount. A footnote points to a separate exception for some HomePath property purchases. Fees that sellers customarily pay under local custom don't count toward the cap.
Three illustrative examples
The examples below use made-up round numbers to show the math. They are not quotes or loan offers.
A small down payment. A buyer purchases a $400,000 home that appraises at $400,000 and puts 5% down, so the LTV is 95%. The cap is 3% of $400,000, or $12,000. Even if the seller would agree to $15,000, only $12,000 fits within the limit.
A larger down payment, smaller closing bill. Same home, but the buyer puts 15% down, so the LTV is 85%. The cap rises to 6%, or $24,000. However, financing concessions also cannot exceed the buyer's actual closing costs. If closing costs and prepaids total $15,800, that is the most the credit can cover. The remaining $8,200 would be treated as a sales concession. In that case, asking for a lower price may make more sense than asking for a larger credit.
A low appraisal. The contract price is $400,000, but the home appraises at $385,000, and the buyer borrows $360,000. Measured against the lower value, the LTV is about 93.5%, so the 3% cap applies to $385,000. That makes the limit $11,550, not $12,000. A low appraisal can shrink the credit just when the buyer needs it most.
For an investment property, the cap is 2% at every LTV, or $6,000 on a $300,000 purchase.
What seller money cannot do
Fannie Mae does not allow IPCs to fund the down payment, meet reserve requirements or meet minimum borrower-contribution requirements. Any excess is not simply refunded to the buyer. Contributions above the cap, or above actual closing costs, become sales concessions. A sales concession must be subtracted from the sales price, and the LTV is then recalculated using the lower of the reduced price or the appraised value. That can push a loan into a higher LTV tier, change mortgage insurance coverage or make it ineligible. Contributions paid outside closing and left off the settlement statement make the loan ineligible for sale to Fannie Mae.
Credits, price cuts, lender credits and buydowns
Price reduction. A price cut lowers the sale price itself. It doesn't count against the IPC cap, and it can reduce the loan amount and monthly payment. A credit, by contrast, lowers the cash you bring to closing. We compared the two in more detail in our October 5 analysis.
Lender credits. A lender credit funded by premium pricing, meaning you accept a higher interest rate in exchange for money toward costs, is excluded from IPCs. That's true even if the lender is an interested party. Lender incentives from a lender affiliated with an interested party can still count as sales concessions.
Prepaids and discount points. Seller money can pay prepaid items such as property taxes, homeowners insurance and interest. It can also pay discount points, all subject to the same cap. If a seller or builder pays for a temporary or permanent rate buydown, that cost counts toward the IPC limit too.
How buyers can use this
- Get a cost estimate first. Ask your lender for a Loan Estimate or itemized fee worksheet before you write the offer, so the credit you request matches real costs.
- Match the credit to your LTV tier. A few thousand dollars more down payment can move you from the 3% tier to the 6% tier. Ask your loan officer to run both scenarios.
- Plan for a low appraisal. Make sure the contract explains what happens to the credit if the appraisal comes in below the price.
- Check your program. These are Fannie Mae conventional limits. FHA, VA, USDA and jumbo programs have their own rules, and lenders can add stricter "overlays."
- Read the Closing Disclosure. The Consumer Financial Protection Bureau explains that lenders must deliver it at least three business days before closing. Confirm the seller credit appears and compare the costs to your Loan Estimate.
A seller credit can make a home more affordable to close on. It works best when you size it to your real costs and your loan type, and that's best done before you sign the contract.