VA buyers in Washington can ask a seller to help with certain home-buying costs, but the most important rule is often misunderstood. The VA’s 4% cap applies to specific kinds of seller concessions, not to every closing cost a seller might agree to pay.
That distinction matters when you are making an offer. If you are buying with a VA loan, seller help may reduce your upfront cash needs, but what counts toward the 4% limit depends on the type of cost being covered.
Home buyers in Washington who use a VA loan to buy a house usually have to pay closing costs. This is true for other mortgage programs as well. These are the various fees and charges that can accumulate during the home buying and mortgage process.
During the offer and negotiating stage, home buyers sometimes request the seller to contribute money toward their closing costs. This kind of contribution is commonly referred to as a seller concession.
Seller concessions are closing costs that the seller agrees to cover on behalf of the buyer. These concessions can make it more affordable for a buyer, and can also help sweeten the deal and help the seller close on a deal.
Home buyers who are using a VA loan to buy a home in Washington can ask for seller concessions toward the closing costs. The Department of Veterans Affairs, which manages the program, allows for such concessions. Of course, that doesn’t mean every seller will be willing to make such a concession. It just means that they are allowed to do so.
“The seller can pay for some closing costs. Under our rules, a seller’s ‘concessions’ can’t exceed 4% of the loan. But only some types of costs fall under this 4% rule. Examples are: payment of pre-paid closing costs, VA funding fee, payoff of credit balances or judgments for the Veteran, and funds for temporary ‘buydowns.’ Payment of discount points is not subject to the 4% limit.”
The key point is that the VA uses the term “concessions” in a narrower way than many buyers expect. Some seller-paid items count toward the 4% cap, while other ordinary closing costs may be paid by the seller without being treated the same way.
Example: If the home buyer’s loan amount was $300,000, the seller would be allowed to contribute up to $12,000 (or 4%) toward the specific items listed in the VA guidance above, such as pre-paid closing costs, the VA funding fee, payoff of credit balances or judgments for the Veteran, and temporary buydowns.
That example does not mean all seller help is capped at $12,000. In most cases, the seller can also pay 100% of the buyer’s other closing costs that do not fall into those specific concession categories. These can include such things as the home appraisal, local taxes, and recording fees. So when VA buyers hear about the “4% rule,” the most accurate way to understand it is this: the cap applies to certain VA-defined concessions, not necessarily to all seller-paid closing costs.
Just because you can ask for a seller concession on a VA loan doesn’t necessarily mean you should. It largely depends on the type of real estate market you are in.
In a seller’s market (one with limited inventory but plenty of demand), buyers tend to ask for fewer concessions. On the other hand, a home buyer in a more sluggish real estate market might be able to ask for more in the way of seller contributions. This is true regardless of the type of home loan that’s being used.
You’ve probably heard the expression: “In real estate, everything is negotiable.” This applies to closing costs as well.
The buyer and seller have to agree on various terms of the sale — the price, the escrow period, etc. They also have to agree on whether or not the seller will contribute money to help cover the buyer’s closing costs, and if so by how much.
A practical way to think about this is to start with your available cash and your negotiating leverage. If covering closing costs would stretch your budget, asking for seller help may make sense. If the home is likely to attract multiple strong offers, you might decide to keep the offer cleaner and rely less on concessions.
You can also think in terms of tradeoffs. Some buyers ask for concessions to reduce upfront cash needs, while others may choose to adjust the offer price or structure the deal differently to stay competitive. The right approach depends on how much cash you want to preserve, how strong the property’s demand appears to be, and how flexible the seller seems during negotiations.
Sammamish Mortgage can help. We serve clients across Washington, Idaho, Colorado, Oregon, and California. Since 1992, we’ve been providing several mortgage programs and products with flexible qualification criteria to borrowers across the Pacific Northwest. Visit our website to get an instant rate quote or to use our online mortgage calculator. Or, reach out to us if you are ready to get pre-approved for a mortgage.
Yes. VA buyers can ask a seller to help cover certain home-buying costs. The Department of Veterans Affairs allows seller concessions, but the seller has to agree to them during negotiations.
The VA limits certain seller concessions to 4% of the loan amount. But that cap applies only to specific VA-defined concession categories, not to every closing cost a seller might pay.
No. The 4% rule does not apply to all closing costs. It applies to certain concessions such as pre-paid closing costs, the VA funding fee, payoff of credit balances or judgments for the Veteran, and temporary buydowns.
Under VA rules, some seller-paid items are treated as concessions and count toward the 4% cap, while other ordinary closing costs may be paid by the seller without being counted the same way. That is why the VA’s definition of a concession is narrower than many buyers expect.
In many cases, yes. The seller can often pay 100% of the buyer’s other closing costs that do not fall into the VA’s specific concession categories. The article gives examples such as the appraisal, local taxes, and recording fees.
Yes. The VA guidance quoted in the content lists the VA funding fee as one of the items that can fall under seller concessions subject to the 4% cap.
It means the seller has agreed to contribute $5,000 toward costs the buyer would otherwise pay at closing. Whether that $5,000 counts toward the VA’s 4% limit depends on which specific costs it is covering.
VA buyers usually have closing costs, just like buyers using other mortgage programs. The buyer can pay them, or the seller may agree to pay some or all of them as part of the purchase negotiations, subject to VA rules.
They can, depending on the market. In a seller’s market, buyers often ask for fewer concessions to keep their offer more attractive. In a slower market, buyers may have more room to request seller help with closing costs.
The buyer and seller decide through negotiation. They must agree on the sale terms, including whether the seller will contribute toward the buyer’s closing costs and, if so, how much.
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