🏡 Can the Seller Help Pay My Closing Costs? One Negotiation Could Save You Thousands.

Jacqueline OShaughnessy
Jul 7
4 min read

Updated: Jul 9

By Jacqueline O'Shaughnessy, Loan Officer / Private Capital, NMLS #382900 — South Wind Financial, Inc, NMLS #9462 — Las Vegas, NV

Homebuyer Money-Saving Series | Part 3:

Who This Guide Is For

You've found the perfect home.

Your offer is ready.

Then your Realtor asks,

"Would you rather lower the purchase price OR ask the seller to help with your closing costs?"

Most first-time buyers immediately choose the lower purchase price.

But that isn't always the option that saves the most money upfront.

The Problem

Michael and Sarah had saved enough for a 5% down payment.

They thought they also needed thousands of dollars for closing costs. Their Realtor suggested asking the seller for a small price reduction. Instead, their mortgage professional suggested something different. "What if we asked the seller to contribute toward your closing costs instead?" That one conversation made buying their home much easier.

The Doubts

Many buyers ask:

Can the seller really pay my closing costs?
Is that allowed?
Should I negotiate a lower price instead?
Which option saves me more money?
Will asking for seller concessions hurt my offer?

The answer depends on the market, the loan program, and the overall terms of your purchase agreement.

Understanding Seller Concessions

A seller concession is when the seller agrees to contribute toward certain eligible closing costs as part of the purchase contract.

Instead of reducing the purchase price, the seller helps reduce the amount of cash the buyer needs to bring to closing.

Depending on your loan program and the negotiated contract terms, seller concessions may help cover eligible expenses such as:

Loan fees
Title fees
Escrow fees
Prepaid taxes
Homeowners insurance
Other allowable closing costs

Sometimes Saving Cash Is More Valuable Than a Lower Price

Imagine two buyers purchasing the same home.

Buyer A

Negotiates a $10,000 reduction in the purchase price.

Their monthly payment decreases slightly.

However, they still need to bring thousands of dollars to closing.

Buyer B

Purchases the home at the agreed-upon price but negotiates seller concessions toward eligible closing costs.

Their monthly payment changes very little.

But they save thousands of dollars in cash needed at closing.

For many first-time buyers, preserving cash can make homeownership much more comfortable.

A Strategy Many Buyers Never Hear About

Many buyers assume they should put 20% down to avoid private mortgage insurance (PMI).

In some situations, that may be the right decision.

In others, putting less money down can actually make more financial sense.

Most of the time 5% has a lower interest rate than 20% down.

For example, a buyer may choose to:

Make a smaller down payment.
Keep additional savings available for emergencies, home improvements, or investments.
Benefit from a lower interest rate that may be available with a lower loan-to-value program.
Request removal of PMI once sufficient equity has been established and the loan meets investor requirements.

The right strategy depends on your financial goals, available cash, loan program, and long-term plans.

This is why personalized mortgage planning is so important—there isn't a one-size-fits-all answer.

The Solution

Every purchase contract creates opportunities for negotiation.

Sometimes negotiating the sales price is the best strategy.

Other times, negotiating seller concessions provides greater financial benefit.

The best approach is the one that helps you accomplish your goals. Not simply the one that sounds best at first.

Frequently Asked Questions

Can the seller pay my closing costs?

Yes. Many loan programs allow seller concessions, subject to program guidelines and the terms of the purchase contract.

Is a lower purchase price always better?

Not necessarily. In some cases, reducing the cash required at closing provides greater immediate financial benefit than a small reduction in the monthly payment.

Should I put 20% down?

Not always. While a 20% down payment eliminates PMI, some buyers choose to put less down to preserve cash or take advantage of a lower interest rate in most cases. Every situation is different.

Can PMI be removed?

In many cases, yes. Once certain equity and loan servicing requirements are met, PMI may be canceled on eligible conventional loans. Your loan servicer can explain the requirements that apply to your loan.

Mortgage Terms

Seller Concessions: Funds the seller agrees to contribute toward a buyer's eligible closing costs, subject to loan program limits.

Private Mortgage Insurance (PMI): Insurance typically required on conventional loans with less than a 20% down payment. Eligible borrowers may request cancellation once applicable equity requirements are met.

Closing Costs: Expenses associated with completing a real estate transaction, separate from the down payment.

Key Takeaways

Seller concessions may reduce the amount of cash needed at closing.
A lower purchase price isn't always the best financial strategy.
Preserving cash can be just as important as lowering your monthly payment.
Putting 20% down isn't the right answer for every buyer.
A personalized mortgage strategy can help you choose the option that best fits your financial goals.