Conventional loans cap interested party financing concessions at 3%, 6% or 9% for principal residences and second homes depending on LTV, and 2% for investment properties; FHA and USDA cap seller and other interested party contributions at 6 percent of the sales price, and VA treats concessions above four percent of the reasonable value as excessive. Under Fannie Mae and Freddie Mac, amounts above the limits are treated as sales concessions; FHA treats contributions above 6 percent as an inducement to purchase. VA does not count normal discount points or the buyer's closing costs toward its four percent limit.
Fannie Mae (conventional)
- Principal residence or second home: 3% above 90% LTV/CLTV, 6% at 75.01%–90%, and 9% at 75% or less; investment property: 2% at all CLTV ratios. Fannie Mae B3-4.1-02
- Limits are calculated on the lower of the sales price or appraised value, not the loan amount; customary seller-paid fees under local custom are not subject to them. Fannie Mae B3-4.1-02
- Concessions above the limits are sales concessions, deducted from the sales price with LTV/CLTV recalculated. IPCs cannot fund the down payment, reserves or the minimum borrower contribution. Fannie Mae B3-4.1-02
Freddie Mac (conventional)
- Primary residences and second homes: 3% above 90% LTV/TLTV, 6% above 75% to 90%, 9% at 75% or less; investment properties: 2%. Limits are a percentage of value as defined in Section 4203.1(a). Freddie Mac 5501.6
- Financing concessions may pay only the borrower's closing costs and up to 12 months of HOA dues; amounts above the limits must meet the sales concession requirements. Freddie Mac 5501.6
FHA
- Interested parties may contribute up to 6 percent of the sales price toward origination fees, other closing costs, prepaid items and discount points. FHA 4000.1 II.A.4.d.iii(G)
- The 6 percent limit also covers interest rate buydowns and other payment supplements, mortgage interest payments on fixed-rate loans, mortgage payment protection insurance and the UFMIP. FHA 4000.1 II.A.4.d.iii(G)
- Contributions above actual costs or above 6 percent are an inducement to purchase, and contributions may not be used for the borrower's minimum required investment. FHA 4000.1 II.A.4.d.iii(G)
VA
- A seller concession or combination of concessions above four percent of the established reasonable value is excessive and unacceptable; normal discount points and the buyer's closing costs are not counted. VA Pamphlet 26-7, Chapter 8, Topic 5.d
- Concessions include paying the buyer's VA funding fee, prepaying taxes and insurance, gifts, extra points for permanent buydowns, escrowed funds for temporary buydowns, and paying off the buyer's credit balances or judgments. VA Pamphlet 26-7, Chapter 8, Topic 5.b
USDA
- Seller and other interested party contributions are limited to six percent of the sales price and must be for an eligible loan purpose. USDA HB-1-3555 6.2
- Lender premium-pricing credits and seller funds for repairs or for the buyer's real estate commission are not counted; seller-funded repairs must be escrowed. USDA HB-1-3555 6.2
- Seller contributions cannot pay the applicant's personal debt or act as an inducement through personal property such as furniture or cars. USDA HB-1-3555 6.2
Quick comparison
| Loan type | Maximum concession | Measured against | Source |
|---|---|---|---|
| Fannie Mae, principal residence or second home | 3% above 90% LTV/CLTV; 6% at 75.01%–90%; 9% at 75% or less | Lower of sales price or appraised value | Fannie Mae B3-4.1-02 |
| Fannie Mae, investment property | 2% | Lower of sales price or appraised value | Fannie Mae B3-4.1-02 |
| Freddie Mac | 3% / 6% / 9% (primary and second homes); 2% (investment) | Value per Section 4203.1(a) | Freddie Mac 5501.6 |
| FHA | 6 percent | Sales price | FHA 4000.1 II.A.4.d.iii(G) |
| VA | Four percent (excluding normal discount points and closing costs) | Established reasonable value | VA Pamphlet 26-7, Chapter 8, Topic 5.d |
| USDA | Six percent | Sales price | USDA HB-1-3555 6.2 |
Sources
- Fannie Mae Selling Guide, September 2, 2026 version: B3-4.1-02, Interested Party Contributions (IPCs) (p. 415, 416)
- Freddie Mac Single-Family Seller/Servicer Guide, September 16, 2026 version: 5501.6(b)(ii), Maximum financing concessions limits (p. 5501-42, 5501-43); 5501.6(b)(i), Definition and acceptable uses of financing concessions (p. 5501-42)
- FHA Single Family Housing Policy Handbook 4000.1, August 12, 2026 version: II.A.4.d.iii(G), Interested Party Contributions (TOTAL) (p. 260, 261)
- VA Lender's Handbook (VA Pamphlet 26-7), August 12, 2026 version: Chapter 8, Topic 5.d, The Four Percent Limit (PDF p. 214); Chapter 8, Topic 5.b, Seller Concessions (PDF p. 213, 214)
- USDA HB-1-3555 Guaranteed Loan Program Handbook, March 2, 2026 version: Chapter 6, 6.2 Eligible Loan Purposes, C. Reasonable and Customary Expenses (Interested Party Concessions) (p. 6-3)
Agency guides set the baseline; individual lenders can add stricter overlays. Sources are the guideline versions in Zeitro Strata as of October 29, 2026.