During the negotiation process, homebuyers using a VA loan may ask the seller to offer additional concessions (or payments) to help cover some expected costs related to purchasing the home.
Seller concessions are anything of value added to the purchase of a home or property for which the buyer pays no additional fees and the seller is not required to pay.
While seller concessions with a VA loan will vary depending on the house and buyer, some examples include:
If you’re purchasing a home with a VA loan, the VA mandates that the total value of seller concessions must not exceed 4% of the "established reasonable value” of the property. However, this doesn’t count typical closing costs, so buyers can ask sellers to cover any loan-related costs at closing as well.
The 4% rule keeps the seller from offering so many concessions that a buyer is tempted to take out a VA home loan amount they can't really afford. In comparison, conventional loans typically set a 3% cap on seller concessions.