A straight answer
Should I ask the seller to buy down my rate or lower the price?
The direct answer
It depends on what you need most: less cash at closing, a lower payment or a lower price. I compare both on your actual loan and down payment, because a credit only helps if the loan lets you use it. I'm Zach von der Linden (NMLS 1652805), a mortgage broker with West Capital Lending, based in San Clemente.
I arrange the loan with a lender. The lender's pricing decides what a buydown buys, and the loan program sets how much of a seller credit you can use. Text or call me with the price, the proposed credit or price cut, the loan type and your down payment, and I will lay the structures side by side. I work with buyers in California, Utah, Oregon and Arizona.
Zach von der Linden, mortgage broker and Branch Manager, West Capital Lending · NMLS 1652805
Wholesale pricing · California, Utah, Oregon and Arizona
5.0 across 66 reviews on Experience.com (read on 2026-09-24) · Text reaches Zach directly · Last updated 2026-10-14
Seller already offered a credit or a price cut? Text me the offer.
No credit pull happens from a text or a call. Texts and calls go to Zach's cell.
What happens after you text me?
Texts go straight to my cell, and I answer them myself when I'm free. I'll ask for the few details that actually matter, tell you whether the structure looks worth pursuing, and explain the next step. If I don't think the loan fits, I'll tell you that too.
A text or phone conversation does not pull your credit.
Is a seller credit better than a price reduction?
Neither is automatically better. A price cut lowers the contract price, and with the same down payment it usually lowers the loan amount too. A seller credit leaves the price alone and instead pays eligible closing costs and prepaid items, or funds a buydown the loan program allows, so it lowers the cash you bring to closing. I compare both structures against the same loan so you can see which one changes the part of the transaction you care about.
| Option | What changes | How long it matters |
|---|---|---|
| Price cut | The purchase price, and usually the loan amount | Permanent |
| Permanent buydown | The pricing of the mortgage note | The life of that loan |
| Temporary buydown | What you pay during an initial period | Temporary |
| Closing-cost credit | Eligible cash-to-close costs | At closing |
What is the difference between a temporary and a permanent buydown?
A permanent buydown uses discount points to change the terms of the mortgage note for the life of the loan. A temporary buydown uses deposited funds to reduce what you pay during an initial period; the note itself does not change, and under Fannie Mae's rules the lender qualifies you on the full note payment, not the reduced one.
Builders use the same tools on new construction; that version is covered on builder buydown versus a price cut.
Can a seller pay for a temporary buydown on a resale home?
Potentially, yes. Seller-funded temporary buydowns are allowed under several programs when the transaction meets the rules. On a loan sold to Fannie Mae, a seller-funded temporary or permanent buydown is an interested party contribution and counts toward the contribution limit. VA also permits seller-funded temporary buydowns, as a concession inside its own limit, described below.
Can I use a seller credit for closing costs instead?
Often, yes. Seller contributions can pay eligible closing costs and prepaid items, within the loan program's limit and up to the actual amount of those costs. They cannot become extra cash to you if the credit is larger than what the loan can use, and under Fannie Mae's rules they cannot be used for the down payment, reserves or the minimum borrower contribution. FHA likewise does not let them fund the borrower's minimum required investment.
The appraisal matters too: the conventional limits are measured against the lower of the sales price or the appraised value, so a low appraisal can shrink the credit the loan allows.
How much can a seller contribute on a conventional loan?
On a loan sold to Fannie Mae, the interested party contribution limit depends on occupancy and on the combined loan-to-value, and it steps down as the loan-to-value rises. These are limits on the contribution, not interest rates, and the credit still cannot exceed your actual closing costs and prepaids.
| Fannie Mae transaction | Limit |
|---|---|
| Principal residence or second home, combined loan-to-value above 90% | 3% |
| Principal residence or second home, combined loan-to-value 75.01% to 90% | 6% |
| Principal residence or second home, combined loan-to-value 75% or less | 9% |
| Investment property, any combined loan-to-value | 2% |
Freddie Mac sets its own limits by occupancy and loan-to-value in its own guide. The structure is similar, and its concessions also cannot exceed actual closing costs, but the lender confirms which set of limits applies to your loan. Fees the seller customarily pays under local custom are not counted against the Fannie Mae limit.
Still figuring out what purchase price works before you negotiate? Get pre-approved first. It starts online and uses a soft credit check, with no hard pull for the first look.
How much can the seller pay on an FHA loan?
FHA lets interested parties contribute up to 6% of the sales price toward origination fees, other closing costs, prepaid items and discount points. That 6% includes any seller-paid permanent or temporary buydown and any seller payment of the upfront mortgage insurance premium. Anything above 6%, or above the actual costs, counts as an inducement to purchase and reduces the sales price used for the loan.
How much can the seller pay on a VA loan?
VA treats ordinary closing costs differently from concessions. VA does not cap what a seller pays toward the closing costs of the loan itself, but it limits seller concessions to 4% of the reasonable value of the home shown on the VA Notice of Value. Concessions include things like paying the VA funding fee, paying off debts you owe and prepaying hazard insurance. A seller-funded or builder-funded temporary buydown is a concession inside that 4%, and the buydown funds go into a separate escrow account.
What happens if the seller credit is more than I can use?
Do not assume the unused amount becomes cash to you. On a Fannie Mae loan, a contribution above the limit or above your actual costs is treated as a sales concession and reduces the price used to measure the loan; FHA treats the excess as an inducement to purchase with the same effect. I size the requested credit against the actual closing costs and prepaids before the contract language is final, so nothing is left on the table.
Once the credit or the price is settled and the contract is signed, the next question is timing: when to lock your rate, and what happens if the lock expires. A change to the price or the credit after locking can change the loan the lock was priced on, so I settle the structure first.
Should I ask for both a price cut and a seller credit?
Potentially. A seller can negotiate more than one part of the transaction. I compare the combined structure against the appraisal, the loan program limits and your actual cash-to-close needs rather than assume that stacking concessions always adds value. How the offer is written matters, so send it to me before it is final.
Already in escrow and rates went up? A seller credit is one of the options on what to do if rates went up during escrow.
Questions people ask next
Is a seller credit the same as a price reduction?
No. A price reduction lowers the contract price. A seller credit keeps the price and pays eligible closing costs, prepaid items or an allowed buydown, within the limits of the loan program.
Can a seller credit pay discount points?
Often, yes. Under Fannie Mae and FHA rules, discount points for a permanent buydown are among the costs an interested party can pay, and the amount counts toward the contribution limit.
Can a seller pay for a temporary rate buydown?
Potentially. Several programs allow it. Under Fannie Mae the seller-funded subsidy counts toward the interested party contribution limit, and VA treats it as a concession within its own limit.
Can I use a seller credit for closing costs and prepaid expenses?
Usually, yes, up to the actual amount of those costs and within the loan program limit. The lender confirms which costs are eligible on your loan.
Can seller credits be used for my down payment?
Generally not. Fannie Mae does not allow interested party contributions to fund the down payment, reserves or the minimum borrower contribution, and FHA does not allow them to fund the minimum required investment.
What happens to seller credit I do not use?
It does not become cash to you. Depending on the program, the excess is reduced, restructured or treated as a sales concession that lowers the price used for the loan, so I size the credit to your actual costs first.
Can I ask for both a seller credit and a lower price?
Potentially. I compare the combined structure against the appraisal, the program limits and your cash-to-close needs before the offer is written.
What clients say
Zach was so easy to work with. He made a stressful situation into a very positive experience for us and did push us one way or another. He listened to what we hoped we could accomplish and made it happen.
Word for word from Experience.com. Read all reviews.
Sources and checked dates
Sources: Fannie Mae Selling Guide, B3-4.1-02, Interested Party Contributions (IPCs) (checked 2026-10-09) · Freddie Mac Bulletin 2022-7 (Guide Section 5501.5) (checked 2026-10-09) · HUD Handbook 4000.1, II.A.4, Interested Party Contributions (checked 2026-10-09) · VA, Funding fee and closing costs; VA, Temporary buydowns (checked 2026-10-09) · Fannie Mae Selling Guide, B2-1.4-04, Temporary Interest Rate Buydowns (checked 2026-10-07).
Show each claim on this page, what it depends on, and the date it was checked (5)
| What we say, and what it depends on | Source | Checked |
|---|---|---|
| Fannie Mae Selling Guide B3-4.1-02: interested party contributions on a principal residence or second home are limited to 3% with a CLTV above 90%, 6% at 75.01% to 90%, and 9% at 75% or less; investment property, 2% at any CLTV. The limit is based on the lower of the sales price or appraised value. IPCs can pay closing costs and prepaids (and HOA assessments, within limits). Amounts above the limit, or above actual closing costs, are sales concessions and reduce the sales price used for the loan-to-value. IPCs cannot be used for the down payment, reserves or the minimum borrower contribution. Interested-party-funded temporary or permanent buydowns count toward the limit. Fees customarily paid by the seller under local custom are excluded. | Fannie Mae Selling Guide, B3-4.1-02, Interested Party Contributions (IPCs) | 2026-10-09 |
| Freddie Mac Bulletin 2022-7: Guide Section 5501.5 sets interested party contribution limits by occupancy and LTV/TLTV (2%, 3%, 6% or 9%), and contributions cannot exceed actual closing costs. | Freddie Mac Bulletin 2022-7 (Guide Section 5501.5) | 2026-10-09 |
| HUD Handbook 4000.1 (II.A.4, Interested Party Contributions): interested parties may contribute up to 6% of the sales price toward origination fees, other closing costs, prepaid items and discount points; the 6% includes interested-party payment for permanent and temporary buydowns and payment of the upfront mortgage insurance premium. Contributions above 6% or above actual costs are an inducement to purchase that reduces the sales price for loan purposes. IPCs cannot be used for the borrower's Minimum Required Investment. Lender or TPO premium pricing credits are excluded when the lender is not the seller, agent or builder. | HUD Handbook 4000.1, II.A.4, Interested Party Contributions | 2026-10-09 |
| VA: the seller can pay the closing costs of the loan without a VA limit, but seller concessions are limited to 4% of the reasonable value of the home from the VA Notice of Value. Concessions include paying the VA funding fee, paying off buyer debts and prepaying hazard insurance. A seller- or builder-funded temporary buydown is a concession within the 4%, and the buydown funds go into a separate escrow account. | VA, Funding fee and closing costs; VA, Temporary buydowns | 2026-10-09 |
| Fannie Mae Selling Guide B2-1.4-04: with a temporary interest rate buydown, "the mortgage instruments must reflect the permanent payment terms rather than the terms of the buydown plan," the buydown plan may not change the terms of the note, the lender must qualify the borrower "based on the note rate without consideration of the bought-down rate," and the buydown agreement must provide that the borrower still owes the note payments if the buydown funds are not available. Buydown funds from an interested party fall under the interested-party contribution limits. | Fannie Mae Selling Guide, B2-1.4-04, Temporary Interest Rate Buydowns | 2026-10-07 |
Written for and accountable to: Zach von der Linden, Mortgage broker and Branch Manager, West Capital Lending.
Last updated 2026-10-14.
Verify him: NMLS Consumer Access, ID 1652805 · 66 reviews on Experience.com.
Sources for product claims are listed on this page, with the date each was checked.