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Seller Credit vs Price Reduction Calculator
Same dollar concession can be structured as cash at closing or as a price cut. They produce different monthly payments, different loan amounts, and different cash needs at close. This calculator shows both side-by-side so you pick the better structure for your situation.
Credit: monthly P&I
$2,545
Reduction: monthly P&I
$2,485
Monthly difference
$60
credit is higher
Credit: cash at close
$32,500
Reduction: cash at close
$41,500
Better structure
Credit: better for cash-constrained buyers
How the math works
A seller credit keeps the contract price at list while giving the buyer cash at close (applied to closing costs or prepaids, not down payment). A price reduction lowers the purchase price and loan amount. The buyer's total outlay looks different between them.
Credits are better when the buyer is cash-tight (covers closing costs without raising the down payment) but produce a slightly higher loan amount and monthly payment. Reductions lower monthly cost but require the buyer to fund closing costs separately. Seller concession caps (3–9% depending on loan type/LTV) may limit credits.
How to Use
- Enter list price and the negotiated concession amount.
- Enter down payment %, rate, and term.
- Read both structures side-by-side: monthly payment, cash at close, and recommended choice.
Frequently Asked Questions
Which is better for cash-tight buyers?
Seller credit. A credit offsets closing costs and prepaids without requiring the buyer to cover them from separate cash. Buyer keeps more reserves after closing.
Which produces a lower monthly payment?
Price reduction. A lower sale price means a lower loan amount, which means lower P&I and lower insurance/taxes (for taxes tied to assessed value).
What are the concession caps?
Conventional: 3% at 90%+ LTV, 6% at 75–89% LTV, 9% at under 75% LTV, 2% on investment properties. FHA: 6%. VA: 4% non-recurring + all loan costs. USDA: 6%. Confirm with lender before structuring.
Can a credit be used for the down payment?
Generally no for conventional and FHA — seller credits apply to closing costs, prepaids, and temporary buydowns, not down payment. VA and some niche programs allow down payment grants but those aren't seller credits.
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