Financing · Fannie Mae B3-4.1-02Seller concessions limits on Fannie Mae loans
On a Fannie Mae conventional loan, financing concessions from interested parties – the seller, builder, agents and their affiliates – are capped by the loan-to-value ratio: 3% above 90% LTV, 6% from 75.01% to 90%, and 9% at 75% or less for a principal residence or second home, and 2% for investment property. The percentage is of the lower of the sales price or appraised value. Anything above the limit, or above the buyer's actual closing costs, is treated as a sales concession and deducted from the price.
Maximum financing concessions
Principal residence or second home
LTV/CLTV above 90%: 3%. 75.01%–90%: 6%. 75% or less: 9%.
Investment property
2% at all CLTV ratios.
Base
The lower of the sales price or appraised value – not the loan amount.
What they can pay
Borrower closing costs including prepaids, and HOA assessments for up to 12 months after settlement. Never the down payment, reserves or minimum borrower contribution.
Rules that trip files
- Concessions above the limit – or above the buyer's actual closing costs – become sales concessions, deducted from the price, and LTV is recalculated.
- Common and customary seller-paid fees under local custom are not subject to the limits.
- An interested party's buydown subsidy counts toward the limit.
- Undisclosed contributions outside closing make the loan ineligible – everything goes on the settlement statement.
What the TC checks
- The seller credit in the contract against the loan type and LTV – before the lender flags it late.
- Repair credits negotiated after inspection – they count too.
- That the credit does not exceed the buyer's estimated closing costs.
Questions about seller concessions
How much can a seller contribute on a conventional Fannie Mae loan?
For a principal residence or second home: 3% above 90% LTV, 6% between 75.01% and 90%, and 9% at 75% or less; 2% for investment property.
Are seller concessions based on the loan amount?
No. Fannie Mae uses the lower of the sales price or the appraised value.
What happens if seller credits exceed the limit?
The excess is a sales concession: it is deducted from the sales price and the LTV is recalculated.
Can seller concessions pay the down payment?
No. Interested party contributions cannot be used for the down payment, reserves or the minimum borrower contribution.
Do FHA and VA loans have the same limits?
No. This page covers Fannie Mae conventional loans; government loan programs set their own limits – check with the lender.
Related guides
Note the agreed seller credit on the deal in ClosingCode and add a task to confirm it with the lender before the appraisal comes back.
Start free trialSource: Fannie Mae Selling Guide B3-4.1-02, Interested Party Contributions (IPCs), dated 05/07/2025 (selling-guide.fanniemae.com, read October 24, 2026).
General information, not lending advice. The lender applies the investor's rules. ClosingCode is software; it is not a lender and is not affiliated with Fannie Mae.