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PublishedSeptember 29, 2026Where our VA figures come from
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Costs & Fees6 min read · Updated for 2026

VA seller concessions and the 4% rule

What counts toward the VA's 4% seller-concession limit, which seller-paid closing costs do not count, and how to structure an offer that stays inside the rule.

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Quick answer

What is the VA 4% seller concession rule?

VA limits seller concessions to 4% of the home's reasonable value on the VA Notice of Value. Seller payment of the buyer's normal closing costs and discount points is not a concession, so it does not count toward the 4%. Items like paying the funding fee, prepaid taxes and insurance, or the buyer's debts do count.

  • The cap is 4% of reasonable value, not of the contract price
  • Normal closing costs and discount points paid by the seller do not count
  • Seller-paid funding fee and prepaid taxes/insurance do count
  • Paying off buyer debts or judgments counts as a concession
  • Temporary buydown funds sit inside the 4% allowance
What this means for your mortgage

A seller can cover your normal closing costs and still offer up to 4% of reasonable value in concessions.

Reviewed by the licensed mortgage team at Simply Approved Mortgages · Last verified September 29, 2026 against the VA Lenders Handbook (M26-7)

Estimate closing costs

Summary and page contents

Published:

This guide focuses on the 4% seller-concession limit. For the full picture, see VA closing costs and who pays them.

Short answer: VA caps seller concessions at 4% of the reasonable value shown on the VA Notice of Value. Seller payment of your normal closing costs and discount points does not count toward that 4%, so a seller can cover customary closing costs and still offer some concessions.

What is a seller concession?

A seller concession is anything of value the seller adds to the transaction for the buyer beyond the normal, customary costs of the loan. VA treats concessions separately from closing costs so the rule does not discourage sellers from paying ordinary fees.

What counts toward the 4% limit

Seller pays…Counts toward 4%?
Buyer's VA funding feeYes
Prepaid property taxes and homeowners insuranceYes
Paying off buyer's credit balances or judgmentsYes
Gifts (appliances, electronics, furniture)Yes
Buyer's normal, customary closing costsNo
Discount points (within normal market practice)No

Worked example

On a home with a $400,000 reasonable value, the 4% ceiling is $16,000. The seller could pay the buyer's customary closing costs and up to $16,000 of concessions, such as the funding fee and prepaid escrows. The figures are illustrative only; your lender itemizes the actual costs on the Loan Estimate.

How to use the rule when making an offer

  1. Ask your loan originator for an itemized estimate so you know which costs are customary and which are concessions.
  2. Write the request in the contract as a dollar amount, not a percentage of the price.
  3. Remember the cap is measured against the appraised reasonable value. If the appraisal comes in low, the concession ceiling falls with it.

Related: VA closing costs · funding fee explained · VA vs conventional

Sources: VA Lenders Handbook M26-7, Chapter 8 (Borrower Fees and Charges and the VA Funding Fee); 38 CFR Part 36 (§36.4307); VA.gov home loans.

Frequently asked

What is the VA 4% seller concession rule?

VA limits seller concessions to 4% of the home's reasonable value (the appraised value on the Notice of Value). Concessions are items of value the seller gives the buyer beyond normal closing costs.

Can the seller pay all of my VA closing costs?

Yes. Seller payment of the buyer's normal, customary closing costs and discount points is not treated as a concession, so it does not count toward the 4% limit.

What counts toward the 4%?

Examples include the seller paying the VA funding fee, prepaying the buyer's property taxes and insurance, paying off the buyer's debts or judgments, and gifts such as appliances or electronics.

Does the 4% limit apply to the purchase price?

No. It is measured against the reasonable value set by the VA appraisal, not the contract price.

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