The VA Loan Secret Weapon: Seller Concessions Explained

When buying a home with a VA loan, one of the key benefits for military veterans and active-duty service members is the ability to negotiate seller concessions. But what exactly are seller concessions, and why do they differ between VA loans and other loan types? In this blog post, we’ll break down the concept of seller concessions, explore how they work with VA loans, and explain why the limits are different from those for conventional and FHA loans. Plus, we’ll share real-life examples of how seller concessions have helped clients achieve homeownership with added financial flexibility.

What Are Seller Concessions?

Seller concessions refer to a portion of the seller's proceeds that are applied toward the buyer’s closing costs and other allowable expenses. These can include fees for the loan, title services, taxes, and insurance. It’s essentially a way for the seller to help cover the buyer’s out-of-pocket costs, reducing how much cash a buyer needs to close.

VA Seller Concessions: What’s Allowed?

VA guidelines allow sellers to contribute up to 4% of the sale price toward concessions. These concessions can be used for:

• Prepaid property taxes and insurance

• VA funding fee

• Paying off collections or credit accounts (with approval)

• Gifts (e.g., appliances or even a service dog)

• Interest rate buydowns

The 4% cap ensures that concessions don’t inflate the sales price or create risky loan conditions—but within that range, they can be powerful tools to help VA buyers close with confidence.

Real-Life Examples: How Seller Concessions Helped Our VA Clients

1. Paying Off Debts

We worked with a retired Army veteran who had a high-interest credit card balance that was making it difficult to qualify. Thanks to the 4% seller concessions, we were able to apply part of the seller’s proceeds to pay off those debts at closing—helping the borrower improve their financial standing and qualify for the home they loved.

2. Purchasing Appliances

An active-duty Navy client didn’t have a refrigerator, washer, or dryer when they moved. We structured the seller concessions to cover all her closing costs and also used part of the allowed amount to help her purchase brand-new appliances for her new home—without increasing her out-of-pocket expense.

3. Paying for a Service Dog

One of our most memorable clients was an Army veteran who had qualified for a service dog to help with PTSD. With the seller’s agreement, we used a portion of the 4% concessions to cover part of the training and placement costs of the dog—supporting the veteran’s well-being in a meaningful way.

4. Closing Costs and Repairs Covered

In one Arizona closing, we worked with a VA buyer whose agent negotiated the full 4% seller concession to cover all of the buyer’s closing costs. But that’s not all—on top of the concessions, the agent also negotiated critical repairs for the roof and A/C systems.

Here’s how it worked:

• The seller agreed to pay licensed contractors directly through escrow at closing.

• Invoices for the repairs were submitted to the title company, and the amounts were deducted from the seller’s proceeds.

• An addendum was included in the contract file, clearly detailing how the 4% concession would be applied toward allowable costs, and separately listing the specific invoices the seller agreed to cover through title at closing.

This strategy allowed the buyer to move into a home with newly repaired major systems—without using their own funds for repairs or closing. A win-win, made possible through smart structuring.

📌 Note for Arizona agents: Always confirm with your broker how best to structure your contract and related addenda. Transparency and documentation are key, especially when structuring seller-paid repairs in conjunction with VA concessions.

Why Are VA Concession Limits Different?

VA loans are built to support veterans and active-duty military members, and the guidelines reflect that mission. Here’s why VA allows up to 4% in concessions:

1. No Down Payment: With no down payment requirement, buyers may still need help covering closing costs—VA concessions help close that gap.

2. Lender Security: VA loans are backed by the government, reducing risk for lenders and allowing more flexibility for buyers.

3. Support for Veterans: VA loans are a benefit earned through service, and the program is designed to support veterans in all aspects of homeownership.

4. Unique Needs: VA buyers may have different financial challenges—like service-related disabilities, recent relocations, or job changes—which concessions can help ease.

Seller Concession Limits by Loan Type

Here’s a quick comparison of seller concession limits:

Final Thoughts

VA seller concessions are more than just a negotiating tool—they’re a powerful benefit that can reduce financial stress for veterans and help them move into safe, comfortable homes with confidence. From debt payoffs and appliances to service dogs and critical repairs, we've seen firsthand how this benefit can be life-changing when used wisely.

If you’re working with a VA buyer—or are one yourself—don’t overlook seller concessions when writing or reviewing offers. And for agents, be sure to work closely with your lender and broker to structure your contracts properly, especially when combining concessions with seller-paid repairs.

Have questions about using seller concessions for your next VA loan? Let’s talk—I’m here to help.