Seller's Credits
Money the seller contributes toward the buyer's closing costs or prepaids as part of the negotiated sale.
In some transactions, the buyer negotiates a seller credit at the closing table, the seller effectively reduces their net proceeds by an agreed amount and that amount applies against the buyer's closing costs. This can help a buyer who's short on cash to close without changing the purchase price the seller advertised.
Seller credits are capped by program. Conventional loans on a primary residence with at least 10% down typically allow up to 6% in seller credits. FHA caps at 6%, VA at 4%, USDA at 6%. The cap is calculated against either the purchase price or appraised value, whichever is lower.
Credits can only apply against actual costs, you can't pocket the difference. If the credit exceeds what's owed, the excess is forfeited or used to lower the loan balance, depending on the lender and program.
Related terms
Other terms you'll see alongside Seller's Credits
The collection of fees and prepaid items, separate from the down payment, that a borrower pays at closing.
The total amount of money the borrower must bring to the closing table in certified funds.
The signed contract between buyer and seller that defines the terms of a real estate sale.
Money the lender contributes toward your closing costs in exchange for accepting a slightly higher interest rate.
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