Learning Objectives
- Itemize lender, third-party, and prepaid closing costs
- State seller concession caps by program
- Distinguish concessions from price reductions
- Use concessions for rate buy-downs and PMI buy-outs
What's Included
- Lender fees — origination, underwriting, processing
- Third-party — appraisal, title, escrow, recording, survey
- Prepaids — taxes, hazard insurance, per-diem interest, MI reserves
- Government — transfer taxes, recording fees
Seller Concession Caps
- FHA — up to 6%
- VA — up to 4% (plus reasonable closing costs separately)
- USDA — up to 6%
- Conventional owner-occupied <10% down — 3%; 10–25% down — 6%; investment — 2%
Strategic Use
Instead of a price reduction, structuring the offer with concessions can fund a 2-1 rate buy-down, single-premium PMI, or prepaid escrows — often a stronger monthly payment outcome than a lower price.
Key Takeaways
- Closing costs typically run 2–5% of loan amount.
- FHA, VA, USDA, and Conventional all cap concessions differently.
- Concessions can fund buy-downs that beat a price cut on monthly payment.
End-of-Module Exam
Module 19 Exam — 5 questions
Pick the best answer for each question. Pass with 80% or higher to mark this module complete.
- 1.
FHA seller concessions are capped at:
- 2.
Conventional owner-occupied with less than 10% down caps concessions at:
- 3.
A 2-1 rate buy-down is usually funded by:
- 4.
Which is a prepaid closing cost?
- 5.
VA seller concessions for closing costs are capped at:
0 of 5 answered