Seller Concessions In Media: What Buyers Should Know

Trying to stretch your homebuying budget in Media without draining your savings at closing? Seller concessions can help you cover closing costs or even buy down your interest rate when used correctly. If you are weighing options across Media and Delaware County, you want clear rules and smart strategies so you do not run into lender or appraisal issues. This guide walks you through the limits by loan type, what works locally, and how to negotiate from a position of strength. Let’s dive in.

Seller concessions explained

Seller concessions, also called seller credits, are amounts a seller agrees to pay on your behalf at closing. You can apply them to closing costs, prepaid items like taxes and insurance, discount points for a rate buy‑down, and sometimes lender‑required repairs as a credit on the Closing Disclosure.

Concessions lower your out‑of‑pocket amount due at closing. They do not increase your loan size beyond program limits. They are also not the same as a price reduction, even though both change the net result. Lenders and appraisers review credits differently than price drops during underwriting.

You cannot use seller concessions for your required down payment. Down payment funds must follow each program’s gift and sourcing rules. All concessions must be disclosed on your Closing Disclosure and reduce the seller’s net proceeds.

Program limits buyers should know

Loan programs cap how much a seller can contribute. Always confirm current limits with your lender, since lenders can add stricter overlays.

• Conventional loans (Fannie Mae and Freddie Mac):

  • Less than 10 percent down (LTV over 90 percent): maximum 3 percent seller concession.
  • 10 to 25 percent down (LTV 75 to 90 percent): maximum 6 percent.
  • More than 25 percent down (LTV under 75 percent): maximum 9 percent.
  • Concessions cannot be used for your down payment.

• FHA loans: Up to 6 percent of the lesser of the purchase price or appraised value. Allowed uses include closing costs, prepaid items, discount points, and reasonable costs. The seller cannot fund your down payment.

• VA loans: Sellers can pay customary closing costs and certain concessions, commonly capped around 4 percent of the purchase price or reasonable value for items like prepaids and temporary buydowns. The seller cannot pay the VA funding fee.

• USDA loans: Seller concessions commonly allowed up to 6 percent of the purchase price for closing costs and prepaids. Check your lender’s overlays.

• Assistance programs: State and local down payment assistance options have their own rules for acceptable funds. Many prohibit the seller as a donor for down payment gifts.

How concessions reduce cash to close

Here are two simplified examples to show how credits work. Your actual numbers will vary based on your loan, taxes, insurance, and escrow needs. Run scenarios with your lender and title company early.

Example 1: FHA buyer at $350,000

• FHA limit: 6 percent. That is up to $21,000 in potential seller credit.
• Typical closing costs and prepaids might be about 2.5 percent, or $8,750.
• A possible mix: $7,500 toward a rate buy‑down, $8,750 for closing costs, and $4,750 reserved for lender‑required repairs or extra escrow.
• Result: You bring little or no cash for closing costs. You still need your required FHA down payment and any reserves your lender needs.

Example 2: Conventional buyer, 5 percent down at $450,000

• Down payment: $22,500. Your LTV is 95 percent, so the concession cap is 3 percent, or $13,500.
• If closing costs run about 2.5 percent, or $11,250, a $13,500 credit could cover most costs. You still need the $22,500 down payment and any reserves.
• If you want a rate buy‑down, part of the $13,500 can purchase discount points, subject to lender and appraisal review.

Why concessions may not zero out your cash needs:

• They cannot fund your down payment.
• Lenders sometimes require you to keep reserves after closing.
• Some fees, like inspections, are paid before closing.

When concessions are common in Media

Media and nearby Delaware County neighborhoods include older single‑family homes, twins, rowhomes, and some newer subdivisions. Homes that need updates or have age‑related items often lead to credit requests for repairs or closing costs. Builders and developers sometimes offer incentives such as closing cost credits or temporary rate buydowns on new homes.

Market conditions matter. In a hot sellers’ market, concessions are less common and may weaken your offer compared with a clean, no‑credit offer. In a balanced or cooler market, concessions are more common and can help you secure a better payment without forcing a list price cut. Your agent can review recent comparable sales in Media and nearby townships to see if credits have been typical in the last 30 to 90 days.

Smart negotiation strategies

Tailor your approach to the market and the property.

• In a competitive market:

  • Keep the credit request modest and focused on closing costs or a small buydown.
  • Consider offering full price while asking for a credit that fits program limits. Some sellers prefer a higher price with a credit, while others prefer a price reduction.
  • Strengthen the rest of your offer with solid financing terms and a quick close if possible.

• In a balanced or buyer’s market:

  • Ask for larger credits or request the seller address specific repairs.
  • Use inspection results to support your ask with clear documentation.
  • Be ready to trade price for credit based on your monthly payment goals.

• Understand tradeoffs:

  • Price versus credit can affect appraisal. If a price is pushed higher to support a large credit, the appraisal must support that value.
  • Sellers are focused on net proceeds. If their equity is tight, they may resist large credits even if the price is strong.

How to write the request

Use clear contract language so your lender and title company can apply the credit correctly. Consider language like: “Seller to credit $X at closing toward buyer’s closing costs, prepaid items, discount points, and lender‑required repairs, subject to lender program limits.”

Avoid vague promises such as “seller to pay repairs” unless the seller will complete the work before closing with specific standards and timelines. If repairs are time‑sensitive for loan approval, discuss whether a closing credit for lender‑required items is acceptable to the lender. Share your plan with your lender early so your Loan Estimate and Closing Disclosure show the credit.

Appraisal and lender checkpoints

Lenders and appraisers will review your deal to protect against inflated prices and to confirm compliance.

• Program caps: Credits must fit within the program’s percentage limits. If they do not, the lender will require a change, such as a reduced credit or a price adjustment.
• Appraised value: The appraiser must support the contract price as market value. If the appraisal comes in low, you may need to add cash, reduce price, or revise the credit.
• Source of funds: The seller usually cannot be a donor for your down payment. Your lender will verify where your down payment and reserves come from.
• Documentation: Seller credits must appear on the Closing Disclosure. Any third‑party incentives, such as builder credits, must be acceptable under your program.

Buyer checklist for Media and Delaware County

Use this simple plan to stay organized and avoid surprises.

• Tell your lender and agent early that you plan to request a seller credit.
• Confirm the maximum concession for your loan and down payment.
• Order a home inspection to identify repair issues you may address with credits or seller‑performed work.
• Write clear offer language with a dollar amount or percentage and permitted uses. Include “subject to lender approval and program limits.”
• Run cash‑to‑close scenarios with and without credits. Remember you still need your down payment, inspection fees, deposit, and any reserves.
• Keep an appraisal contingency if you are concerned about price relative to value.
• Check with your title company that the credit will be shown correctly on the Closing Disclosure. Ask for a draft early so you can review final numbers.

Final thoughts and next steps

Seller concessions can be a powerful tool in Media to reduce your upfront cash and improve your long‑term payment, especially when used for closing costs or a strategic rate buy‑down. The key is staying within loan program limits, writing clear offer terms, and matching your ask to local market conditions. With the right plan, you can protect your financing and still get to the closing table with confidence.

If you want a clear game plan tailored to Media and Delaware County, let’s talk. I can coordinate with your lender, help you read the local comps, and write strong, compliant offer language. Connect with Romanna Dumyak to schedule a free consultation and map your next steps.

FAQs

Can seller concessions pay my down payment if I am buying in Media?

• No. Seller concessions generally cannot fund your required down payment. Down payment gifts must follow each loan program’s approved donor rules.

What are the typical seller concession caps by loan type in Pennsylvania?

• Conventional caps range from 3 to 9 percent based on your down payment. FHA allows up to 6 percent, VA commonly allows up to 4 percent for certain items, and USDA commonly allows up to 6 percent.

Will asking for a seller credit make my offer weaker in a hot Media market?

• In a competitive sellers’ market, yes, a credit can make your offer less appealing than a clean, no‑credit offer. In a balanced market, credits are more common and often accepted.

Can I use a seller credit to buy down my interest rate on a Media home?

• Yes. Many programs allow you to use part of the credit for discount points and buydowns, subject to program limits and lender approval.

What happens if our agreed seller credit exceeds the loan program limit?

• The lender will require a change. You may reduce the credit, adjust the price, or bring additional funds. If not corrected, the loan can be denied.

How do appraisals in Media handle a contract with a large seller credit?

• The appraiser must support the contract price as market value. If the value does not support the price and credit, you may need to renegotiate or bring cash to close.