Are closing costs keeping you from making a move in the Bronx? You are not alone. Many first-time buyers can qualify for a mortgage but struggle to bring enough cash to closing. Seller concessions can help bridge that gap and make a smart offer possible. In this guide, you will learn what seller concessions are, how each mortgage program treats them, what they can cover, and how to use them in Bronx negotiations, including co-ops and NYC transfer taxes. Let’s dive in.
What seller concessions are
Seller concessions are funds or credits a seller agrees to give a buyer to cover some transaction costs at or before closing. You and the seller negotiate the credit and put it in the purchase contract. It will appear on your closing statement.
Concessions are not the same as a price cut. A price cut lowers the sale price and can change your loan-to-value ratio. A seller credit reduces your out-of-pocket closing costs. That means you may keep more cash on hand on closing day.
Why they matter in the Bronx
Closing costs in New York City can be higher than in many other markets. State and city transfer taxes, title and recording fees, and prepaid items add up fast. First-time buyers in the Bronx often have the income to qualify but need help covering upfront costs. A well-structured seller credit can make the numbers work.
Property type also matters. Co-ops are common in the Bronx and have unique rules. Co-op boards often expect stronger liquidity, and lenders underwrite co-op share loans differently. That can affect how much flexibility you have with concessions. Always check the building’s policies and your lender’s rules early.
Lender program limits at a glance
Mortgage programs set caps on how much the seller can contribute. Lenders can be stricter than these caps. Always confirm with your loan officer before you negotiate.
Conventional loans (Fannie Mae and Freddie Mac)
- If your down payment is less than about 10 percent, the typical cap is about 3 percent of the sale price.
- If your down payment is between about 10 percent and less than 25 percent, the typical cap is about 6 percent.
- If your down payment is 25 percent or more, the typical cap is about 9 percent.
Concessions must go to allowable items. They cannot be used to cover ineligible costs or to give you undisclosed funds.
FHA loans
FHA generally permits seller concessions up to 6 percent of the sale price for closing costs, prepaid items, discount points, and certain other charges. The seller cannot provide your required minimum down payment unless it is through an approved down payment assistance program under FHA rules.
VA loans
VA allows sellers to pay many buyer costs and also allows certain “seller concessions.” In practice, specified concession items are often capped around 4 percent of the sale price or reasonable value. VA has clear lists of what is allowed and what is not, so make sure your lender reviews your contract language.
USDA loans
USDA-guaranteed loans commonly allow seller concessions up to about 6 percent of the sale price for closing costs and related items. Confirm the current limit with your lender.
Lender overlays and appraisals
Some lenders set stricter caps than the program maximums. Appraisal results also matter. Concessions are usually based on the sale price or the lower of sale price and appraised value. If you inflate price to create more room for credits, you could run into appraisal issues or a reduced loan amount.
What concessions can cover
Allowed items vary by program and lender, but common uses include:
- Closing costs such as title and settlement fees, attorney fees, lender origination and underwriting fees, and recording charges if permitted
- Prepaid items such as the first year of homeowner’s insurance and initial property tax escrow, if allowed
- Discount points to buy down your interest rate, either temporarily or permanently
- Required condo or HOA fees due at closing, within program limits
- Certain inspection or escrow items if the lender permits them
Typical restrictions include:
- The seller generally cannot provide your required down payment unless an approved assistance program is used
- The seller cannot pay off your unrelated debts such as personal loans
- Credits cannot exceed the program limit. If they do, the lender may require a lower price or a smaller credit
- Paying the seller’s mortgage payoff is not a buyer benefit and does not count as a concession
Document the credit in your contract with clear language such as “Seller to credit $X at closing toward buyer’s closing costs.” Make sure your lender and closing attorney see the agreed terms early.
Bronx property types and local costs
The Bronx includes co-ops, condos, one to four family homes, and multifamily buildings. Co-ops can add layers of review. Co-op boards may expect higher post-closing liquidity and may influence how seller credits are handled. Your lender may underwrite a co-op share loan with tighter reserves.
New York City and New York State impose transfer taxes and recording fees that increase closing costs compared to many markets. Who pays what can be negotiated but is guided by law and local practice. Your closing attorney and title company will explain typical allocations in your building or neighborhood.
Offer strategy in today’s market
Market conditions shape how far concessions can go.
- In a strong seller’s market with multiple offers, sellers are less likely to approve credits. Buyers may skip concession requests to keep offers competitive.
- In a balanced or buyer-leaning market, concessions are more common. Sellers may prefer a credit over a price cut to preserve headline price for appraisals and comps.
- You can trade a small price increase for a credit, but be careful. The appraisal must still support the contract price. If it does not, your loan amount or terms may change.
Strategic options include asking the seller to pay discount points to lower your rate, or asking for a credit to cover closing costs instead of repairs. Sellers can also offer a limited concession such as a one-year payment buydown rather than a larger blanket credit.
How concessions affect your monthly payment
Concessions can help in two main ways:
- If the seller pays discount points, your interest rate can be lower, which lowers your monthly payment.
- If the seller covers part of your closing costs, your cash needed to close goes down. Your monthly payment stays the same unless you use the credit to buy points or directly reduce principal.
Here is a simple example to show the idea. Let’s say your loan is $300,000 on a 30-year fixed.
- If seller-paid points bring your rate down from 6.00 percent to 5.50 percent, your estimated principal and interest payment could drop from about $1,800 to about $1,700 per month. That is roughly $90 to $100 in monthly savings.
- One point equals 1 percent of the loan amount. Two points on a $300,000 loan equal $6,000. To estimate breakeven, divide the upfront cost of points by the monthly savings to see how many months it takes to recoup.
Exact pricing depends on your lender, program, and the day’s rate sheet. Ask your loan officer for a side-by-side quote that uses seller credit dollars for points versus closing costs.
Step-by-step: using concessions with confidence
Follow these steps early so you can write a clean, strong offer.
For Bronx buyers
- Confirm your loan program and the maximum allowed seller concession with your lender.
- Ask for a cash-to-close estimate that separates down payment, closing costs, and reserves.
- Decide how to use a credit: buy down your rate, cover closing costs, or a mix.
- If you are buying a co-op, ask your agent and attorney to confirm building policies and board expectations on liquidity and credits.
- Request a lender scenario that shows payment and breakeven if the seller funds points.
For Bronx sellers
- Know your net. Concessions reduce your proceeds almost dollar for dollar.
- Ask your listing agent how a modest credit could widen the buyer pool and speed time on market.
- If a buyer asks for a large credit, consider options such as a smaller credit, a limited rate buydown, or a price adjustment.
- Coordinate with your attorney on transfer taxes and how they are typically handled in your property type and neighborhood.
For both sides
- Put the credit in the contract and make sure the lender, title company, and attorneys have the exact wording.
- Keep concessions within the allowed cap for the loan program. If you exceed it, the lender may require changes that can delay closing.
Common pitfalls to avoid
- Asking the seller to cover the down payment when the program does not allow it
- Inflating the price to create credit room without support from comps
- Agreeing to a credit that exceeds program limits or lender overlays
- Forgetting co-op board requirements that may expect higher buyer reserves
- Waiting until the last week to show the lender your concession addendum
Quick lender questions checklist
Use this list when you talk with your loan officer.
- What is the maximum seller concession allowed for my loan and down payment?
- Which costs can a seller credit pay on my loan type?
- How many points would today’s pricing require to lower my rate by 0.25 percent and by 0.50 percent?
- What is the monthly savings and breakeven if we use the credit for points versus closing costs?
- How much cash to close will I need with and without the seller credit?
- Are there any lender overlays I should know about?
A smart concession can be the bridge between a solid preapproval and a successful Bronx closing. Whether you need to reduce cash to close or you want to lower your monthly payment, structure the credit to fit your loan program, property type, and market conditions. If you are navigating co-ops or NYC taxes, add your attorney and lender to the conversation early so there are no surprises at the closing table.
Ready to run scenarios and write a clean offer in the Bronx? Reach out to Rahhim Shillingford for local guidance, clear numbers, and offer strategies that fit your goals.
FAQs
What are seller concessions in a Bronx home purchase?
- Seller concessions are negotiated credits from the seller that pay some of your closing costs at or before closing, shown on your closing statement.
Can a seller in NYC pay my down payment?
- Generally no. Most programs prohibit the seller from providing your required down payment unless an approved assistance program allows it under program rules.
How much can a seller contribute on an FHA loan in the Bronx?
- FHA generally allows up to 6 percent of the sale price for closing costs, prepaid items, discount points, and certain other charges.
Do seller concessions change my monthly mortgage payment?
- Only if you use the credit to buy discount points or reduce principal. Credits that just cover closing costs reduce cash to close but not the monthly payment.
Who pays NYC transfer taxes in a Bronx sale?
- It is guided by law and local practice and can be negotiated. Your closing attorney and title company will explain typical allocations for your deal.
Are concessions allowed on Bronx co-ops?
- Concessions may be used, but co-op boards and lenders have added requirements. Confirm building policies and lender rules early in the process.
