Closing costs add up fast in Downtown Norfolk. If you could shift some of those expenses to the seller, would that help you move sooner? Many first-time and value-focused buyers do exactly that with seller concessions. In this guide, you’ll learn how concessions work, what they can cover, program caps by loan type, and simple tactics to ask for credits without weakening your offer. Let’s dive in.
What seller concessions are
Seller concessions are funds the seller agrees to contribute toward your allowable closing costs. You still buy the home at the agreed price, but your cash needed at closing goes down.
How concessions show up on paperwork
Concessions are usually written into the purchase contract as a seller credit. On your Closing Disclosure, you’ll see the credit applied to your closing costs, prepaid items, and other permitted fees. Sometimes you will structure it as a repair credit after inspections if that is cleaner for both sides.
Credits vs price changes
A credit reduces your cash due while keeping the contract price the same. In some cases, buyers offer a slightly higher price in exchange for a seller credit so the seller nets the same amount. This approach must pass the appraisal and your lender’s underwriting, since your loan-to-value is based on the appraised value.
What concessions can cover
Your lender decides how credits can be used. The list below reflects common allowances and limits.
Common allowed uses
- Closing costs like lender fees, title insurance, recording, settlement, and attorney fees (as permitted by your lender).
- Prepaid items such as the first year of homeowners insurance, property tax escrows, and initial impounds.
- Discount points to buy down your interest rate.
- Credits to address required appraisal or inspection repairs, if acceptable to the lender and title company.
- Some third-party fees such as survey, inspection, pest, or HOA transfer fees, when allowed.
Common limits and prohibitions
- Your required down payment is typically off limits for seller funds.
- Cash back to you at closing is not allowed.
- Paying off your delinquent debts or recurring bills is not permitted.
- Any structure that appears to inflate value beyond what the appraisal supports can cause loan issues.
Caps by loan type
Every loan program has a maximum seller contribution. Your lender may set stricter “overlays,” so confirm the exact limit for your file.
FHA loans
- Typical cap: up to 6% of the sales price toward allowable costs, prepaids, and discount points.
- The seller cannot fund your down payment.
Conventional loans (Fannie Mae/Freddie Mac)
- Caps depend on your down payment and occupancy for a primary residence:
- Less than 10% down: maximum 3%.
- 10% to 25% down: maximum 6%.
- 25% or more down: maximum 9%.
- Second homes and investment properties usually have lower caps.
VA loans
- Many VA lenders allow seller-paid concessions up to 4% of the sales price for certain items, and sellers can also pay customary and reasonable buyer closing costs in many cases. The VA distinguishes between allowable payments and concessions, so review details with a VA-approved lender.
USDA loans
- Typical cap: up to 6% toward closing costs and prepaids.
- Eligibility is limited to designated rural areas and income limits. Downtown Norfolk is generally not USDA-eligible; nearby rural areas may qualify.
Downtown Norfolk factors that shape concessions
Norfolk’s local details can affect how useful a seller credit will be and which costs it can cover.
Condos and HOA items
Downtown inventory includes condos and historic conversions. Your lender may need condo project documentation, and some associations charge transfer or estoppel fees. If your lender allows it, a seller credit can sometimes cover these HOA-related closing costs. Always confirm with the association and title company.
Flood zones and insurance
Norfolk has areas in FEMA flood zones and is prone to tidal flooding. If your home requires flood insurance, your lender may ask for proof of a policy before closing. A seller credit may help cover the first year’s premium or escrow setup if your lender permits. Ongoing premiums after closing remain your responsibility.
Virginia closing costs and taxes
Virginia buyers commonly see state and local recording and transfer costs on their statements. Local practice can vary on who pays what, and some items are negotiable. Your title or settlement agent will confirm what is typical for your property and how a seller credit can apply.
Military presence and VA familiarity
Many Norfolk buyers use VA financing, and local lenders work with these loans every day. That familiarity can help you structure a compliant credit request and set the right expectations with the seller.
When to ask for concessions
Timing matters. Use market signals and property details to guide your request.
Good times to request
- The home has been on the market longer than similar listings.
- The seller appears motivated due to a job transfer, contingent purchase, or an expired listing.
- You need help with cash to close as a first-time buyer.
- Inspections identify repairs that are easier to credit than to complete pre-closing.
When to be careful
- In multiple-offer situations where sellers favor clean terms.
- When your loan’s cap will not allow the amount you want. In that case, consider a smaller credit or adjust price strategy.
How to structure a winning request
A clear, fair request keeps your offer competitive and easier to approve.
Practical tactics
- Be specific: ask for “a seller credit of $X toward buyer closing costs and prepaid items, per lender policy.”
- Tie the number to price: consider a slightly higher purchase price to offset the seller’s net, while watching appraisal risk.
- Show strength: include a pre-approval and a note from your lender confirming the maximum allowed credit for your program.
- Offer flexibility: adjust closing date, consider a short rent-back if needed, or shorten contingency timelines you are comfortable shortening.
- Strengthen earnest money and keep inspections focused and timely.
- If using an escalation clause or “as-is with credit,” state how the credit will be applied.
Put it in writing
Spell out the credit on the purchase contract and any addenda. Confirm the lender permits each item you plan to pay with the credit, and coordinate early with the title company so the Closing Disclosure reflects it correctly.
Appraisal and closing logistics
Credits introduce a few checkpoints you should track from offer to funding.
Appraisal impact
If you raise price to secure a credit, the appraisal still needs to support the contract value. If it comes in low, you may renegotiate or bring funds, depending on your contract terms and lender guidance.
Underwriting review
Underwriters total all seller-paid amounts. If the combined concessions exceed your program cap, the loan will need restructuring before it can be approved.
Closing Disclosure accuracy
Verify the seller credit appears on your Closing Disclosure and that it is applied to the intended costs. Check any HOA or condo fees and required reserves to confirm what is eligible for credit.
Funding and escrow details
Seller credits reduce your cash due, but they do not increase your loan amount beyond program rules. Make sure your lender has all concession documentation cleared well before closing day.
Downtown Norfolk examples
Numbers help make the concept real. Below are illustrative scenarios for a $300,000 purchase. Your actual caps and costs may differ, so check with your lender.
FHA example
- Purchase price: $300,000
- Potential concession: up to 6% = $18,000
- What it might cover: lender fees, title, first-year insurance, tax escrows, and even discount points to lower your rate.
Conventional example (<10% down)
- Purchase price: $300,000
- Potential concession: up to 3% = $9,000
- What it might cover: a portion of closing costs plus one or two discount points, depending on rates and fees.
VA loan example
- Purchase price: $300,000
- Many VA lenders commonly allow seller concessions up to 4% for certain items, and sellers can also pay customary buyer closing costs in many cases.
- What it might cover: allowable closing costs, prepaids, and possibly rate buydowns per lender guidance.
Quick checklist for Norfolk buyers
Use this short list to prepare and keep your offer competitive.
Before you offer
- Confirm your loan program and exact seller concession cap with your lender.
- Get a pre-approval letter plus a note stating the maximum allowable seller credit and permitted uses.
- Review Downtown Norfolk comps, days on market, and concession trends with your agent.
When drafting the offer
- State the credit amount and permitted uses clearly in the contract.
- If you raise price to offset a credit, include language for how you will handle a low appraisal.
- Calibrate contingencies and timelines to balance protection with competitiveness.
Before closing
- Verify the credit is on your Closing Disclosure and applied as intended.
- Confirm HOA or condo fees, transfer charges, and any reserves that might be eligible for the credit.
- If flood insurance is required, plan for the first-year premium or escrow and confirm whether the credit can apply.
Ready to use concessions wisely?
Seller concessions can reduce your cash to close and help you lock a better rate with discount points. The key is to match your request to your loan program, the building’s details, and today’s Downtown Norfolk market conditions. If you want a strategy tailored to your goals, reach out to our local team. We will help you frame a clean, competitive offer and coordinate with your lender and title partners from offer through funding.
Contact BuyLux RE to talk through your numbers and next steps. Schedule a Free Consultation today.
FAQs
What are seller concessions in Virginia real estate?
- They are seller-paid credits toward your allowable closing costs, prepaid items, and certain fees. They reduce your cash due at closing but do not replace your down payment.
How much can a seller pay on a VA loan in Norfolk?
- Many VA lenders allow seller concessions up to about 4% for certain items, and sellers can also pay reasonable closing costs. Confirm specifics with a VA-approved lender.
Can seller concessions cover discount points to lower my rate?
- Often yes. Many programs allow credits for discount points, subject to your loan’s cap and your lender’s rules.
Can concessions pay condo HOA transfer fees in Downtown Norfolk?
- Sometimes. If your lender and association allow it, a seller credit can be applied to eligible HOA-related closing costs. Confirm with your title company and lender.
Do seller concessions affect the appraisal or my loan approval?
- They can. If you raise price to offset a credit, the appraisal must support the value. Underwriting will also verify your total credits do not exceed the program cap.
