Seller Concessions in Texas: How Much a Seller Can Pay Toward Your Closing Costs (2026)

A couple of years ago, asking a Texas seller to pay your closing costs could lose you the house. That isn’t the market most buyers are walking into this fall. Homes are taking longer to sell, plenty of sellers have already cut their price, and mortgage rates above 7% have thinned out the competition.

That gives you something to negotiate with. A seller credit can cover thousands of dollars of your closing costs, pay for a rate buydown, or both. The catch is that your loan program sets a ceiling on how much a seller can contribute, and how you use the money changes what it’s worth to you.

This guide covers how much a seller can pay toward your closing costs on each type of loan, what the money can and can’t cover, how it fits with Texas down payment assistance, and how to write the request into a Texas contract. If you want the full list of what you’ll owe at closing first, see our guide to closing costs in Texas.

Three things buyers get wrong about seller credits

1. “The seller can pay my down payment.” On the main loan programs, no. Fannie Mae’s rules on interested party contributions don’t let seller money pay your down payment, and FHA doesn’t let it count toward your 3.5% minimum investment. That’s where Texas down payment assistance comes in: it can cover the down payment while the seller covers closing costs.
2. “A credit is the same thing as a price cut.” Not quite. A price cut lowers your loan and your monthly payment for as long as you have the loan. A credit leaves the loan amount where it was; depending on how you use it, it lowers the cash you bring to closing, buys down your rate for a few years, or pays points that lower your rate for good. Which one is better depends on whether you’re short on cash or short on monthly budget.
3. “If I ask for help, the seller will walk away.” Some might. But in July 2026, the median Texas seller who cut the price knocked off $13,000, according to the Texas A&M Real Estate Research Center. Many sellers are already giving ground on price; a credit is simply another way to structure it.

There’s no cost to asking, but a seller may counter with a higher price to cover the credit, and the appraisal still has to support that price. Asking for the right amount, in the right part of the contract, is what gets it done.

What seller concessions are, and what they can pay for

A seller concession is money the seller agrees to contribute toward your costs of buying the home. Lenders and loan programs call it an interested party contribution, because the money comes from someone who benefits from the sale, such as the seller, a builder, or a real estate agent.

Seller concessions can generally pay for:

• Closing costs, such as lender fees, appraisal, title charges, and recording fees
• Prepaid items, such as your first year of homeowners insurance, property tax reserves, and prepaid interest
• Discount points and permanent or temporary rate buydowns
• On FHA loans, the upfront mortgage insurance premium; on VA loans, the funding fee

They generally can’t pay for your down payment, your reserves, your personal debts (except on VA loans, where a debt payoff counts toward the 4% concession limit), or items like furniture, appliances beyond what normally conveys, or moving costs. Under FHA’s rules, contributions like those are treated as an inducement to purchase and reduce the price the lender uses, dollar for dollar.

On your paperwork, the money shows up as a seller credit. The CFPB’s guide to the Closing Disclosure describes the seller credit as the amount the seller has agreed to contribute to your closing costs, and its Loan Estimate explainer notes that your estimated cash to close subtracts any seller credits.

Seller concession limits by loan type

Here’s how much a seller can pay toward closing costs on each loan type for a home you’ll live in.

On a $300,000 home, that works out to as much as $9,000 on a conventional loan with a small down payment, $18,000 on an FHA or USDA loan, and $12,000 in VA concessions plus normal closing costs. In practice, you’ll rarely need the full amount, because a credit can’t be larger than the costs it’s paying.

Conventional loans: 3%, 6%, or 9% depending on your down payment

For a primary residence or second home, Fannie Mae and Freddie Mac tie the limit to your combined loan-to-value ratio: all your loans, including any down payment assistance second lien, divided by the lower of the price or appraised value.

• More than 90% loan-to-value (less than 10% down): up to 3%
• 75.01% to 90% (10% to 24.99% down): up to 6%
• 75% or less (25% or more down): up to 9%

If you put down less than 10%, as many first-time buyers do, the 3% limit applies. Keep in mind that an assistance second lien raises your combined loan-to-value, which can keep you in the 3% tier. The money can pay closing costs, prepaids, and up to 12 months of HOA dues after closing. If the seller agrees to more than the limit, or more than your actual closing costs, the extra is treated as a sales concession and subtracted from the price, which can change your loan-to-value and your approval.

One item that isn’t a concession at all: the seller’s share of this year’s property taxes. Texas property taxes are paid in arrears, so the seller credits you for the months they owned the home, and both Fannie Mae and Freddie Mac exclude prorated tax credits from the limit.

The conventional loans used by TSAHC and TDHCA, Fannie Mae’s HFA Preferred and Freddie Mac’s HFA Advantage, follow these same agency guidelines.

FHA loans: up to 6% of the sales price

HUD Handbook 4000.1 lets interested parties contribute up to 6% of the sales price toward your origination fees, other closing costs, prepaid items, and discount points. The 6% also covers seller-paid temporary and permanent buydowns and the upfront mortgage insurance premium.

Two limits matter. The money can’t go toward your minimum required investment of 3.5% of the home’s adjusted value, so you’ll need that from your own savings, a gift, or an eligible down payment assistance program. And any contribution above 6%, or above your actual costs, is an inducement to purchase that reduces the price the lender uses dollar for dollar.

On a $300,000 home, 6% is $18,000, more than most buyers’ closing costs. That headroom is why a credit plus a 2-1 buydown can both fit inside an FHA deal.

VA loans: closing costs plus up to 4% in concessions

VA loans work differently. The VA doesn’t cap the seller paying your normal closing costs at all. In the words of the VA’s funding fee and closing costs page, it doesn’t limit credits for a loan’s closing costs, “but we do limit seller’s concessions to no more than 4% of your home’s reasonable value.”

Under the VA Lenders Handbook (Chapter 8), what counts toward the 4% includes the seller paying your VA funding fee, prepaying your property taxes and insurance, paying off your debts, gifts like appliances or electronics, extra points for a permanent buydown, and money for a temporary buydown. Normal closing costs and discount points that are typical for the market don’t count.

So on a home the VA appraises at $300,000, a seller could pay your normal closing costs and still contribute up to $12,000 in concessions, such as your funding fee and a temporary buydown. Our guide for Texas veterans covers how a VA loan can pair with Texas down payment assistance.

USDA loans: up to 6% of the sales price

The USDA’s HB-1-3555, Chapter 6 limits seller and other interested party contributions to 6% of the sales price, used for eligible purposes such as reasonable closing costs, lender fees, and prepaid items. Lender credits from pricing, money the seller puts in escrow for repairs, and the buyer’s agent commission paid by the seller aren’t counted toward the 6%. Seller money can’t pay your personal debts or buy personal property like furniture or cars, and if your loan ends up with more money than your eligible costs, the extra goes to principal rather than to you.

How seller credits work with Texas down payment assistance

Seller credits and down payment assistance work well together because they cover different things. TSAHC’s Home Sweet Texas and Homes for Texas Heroes programs and TDHCA’s My First Texas Home and My Choice Texas Home offer up to 5% of the loan amount, depending on the option and what each agency’s current rate sheet lists, for your down payment and closing costs. A seller credit can then cover the rest of your closing costs or pay for a buydown.

Neither agency sets its own seller-contribution limit; both follow the loan program’s rules above. But a few program rules shape how the money gets used:

The practical takeaway: with assistance covering your down payment and some closing costs, you may not need a large seller credit. Ask for what fills the gap, and consider putting the rest toward a buydown that lowers your payment.

Buying from a builder? Our guide to new construction down payment assistance covers builder incentives, the builder’s lender, and rate-lock timing.

Seller credit vs. price reduction: which saves you more?

Say you’re buying a $300,000 home with an FHA loan, 3.5% down, at a 7.25% rate, and the seller agrees to give up $10,000. Here are three ways to take it.

For more ways to bring down a payment at today’s rates, see our guide to buying a house with high interest rates.

How to ask for seller concessions in a Texas contract

Most Texas resale purchases use the Texas Real Estate Commission’s One to Four Family Residential Contract (Resale), form 20-19, which took effect July 1, 2026. Three paragraphs matter for seller help:

• Paragraph 12A(1)(b): the seller agrees to pay an amount, written as a dollar figure “not to exceed” a set amount, toward your expenses. This is where a seller credit goes.
• Paragraph 12C: if a government loan program doesn’t allow you to pay certain charges, the seller’s contribution is applied to those charges first.
• Paragraph 6A: a checkbox decides whether the seller or the buyer pays for the owner’s title insurance policy, one of the larger closing costs in Texas. Asking the seller to pay it is another way to get help.

Action step: before your agent writes the offer, ask your lender for the maximum seller contribution your loan allows and an estimate of your closing costs. Ask for a dollar amount in paragraph 12A(1)(b) that fits under both. The TREC contract is a legal document, so lean on your real estate agent, and an attorney if needed, for how to fill it out.

What happens if the seller credit is more than you need

A credit can only pay costs you actually have. If the seller agrees to $12,000 and your closing costs and prepaids come to $9,500, the extra $2,500 generally can’t come back to you as cash. Depending on the loan, the lender may reduce the credit, treat the excess as a reduction in the price, or require an amendment that turns it into a lower price.

That’s why it pays to get a Loan Estimate before you negotiate. The CFPB says lenders must provide one within three business days of your application, and its “Estimated Cash to Close” figure shows how much room a credit really has. Our guide to mortgage pre-approval explains when to get it.

Why fall 2026 is a good time to ask

Statewide numbers back up what many Texas buyers are seeing in person.

A market with more than five months of homes for sale and rising rates gives buyers more room than a seller’s market does. That doesn’t mean every seller will say yes. It means a reasonable request, backed by your lender’s numbers, has a better chance than it did two years ago.

Seller concessions aren’t a trick or a favor. They’re a normal part of buying a home, with clear limits written into every loan program. Know your limit, know your costs, and decide whether a lower price, a credit, or a buydown helps you most. A participating lender can run all three before your agent writes the offer.

Seller concessions in Texas: FAQ

Seller concessions in Texas: FAQ

† ShopDPA is The Texas Down Payment Assistance Marketplace, a home loan and down payment assistance referral service. We are not a mortgage lender, mortgage broker, loan officer, real estate broker, or attorney, and we do not originate, fund, or service loans. We connect Texas homebuyers with licensed mortgage professionals and with down payment assistance programs. We are not affiliated with Fannie Mae, Freddie Mac, HUD, FHA, the VA, USDA, the Texas Real Estate Commission, TSAHC, TDHCA, or any government agency. Limits summarized here are set by those agencies and investors, are subject to change and lender overlays, and are not a commitment to lend or legal advice. Examples are illustrations only. Confirm current requirements with a participating licensed lender and your real estate professional. Equal Housing Opportunity.