Should you agree to pay the buyer's closing costs when you sell in Delaware?
Sometimes — but a closing cost credit (a "seller concession") isn't free money, and it isn't the same as a price cut. The buyer's loan type caps how much you can contribute: conventional loans following Fannie Mae allow 3%, 6%, or 9% depending on the buyer's down payment, and VA loans cap concessions at 4% of reasonable value. A credit only works if the appraisal supports the higher price, and any credit beyond the buyer's actual closing costs is wasted or reduces the sale price on paper. Run the net-proceeds math both ways before you say yes.
By David Sordelet | November 10, 2026
You've got an offer on your Newark, Middletown, Bear, or Dover home. The price looks good. Then you hit the line that says the buyer wants you to pay some of their closing costs.
This is one of the most common negotiating moments I see with sellers across New Castle, Kent, and Sussex Counties — especially in the slower late-fall and winter stretch, when buyers have more leverage and many are stretched on cash after down payment, inspections, and moving.
Here's what I tell every seller who asks: a seller concession is a tool, not a loss. Used the right way, it can get you a higher contract price and a cleaner closing. Used the wrong way, it can blow up at appraisal, run into a lender cap, or quietly cost you more than a straight price reduction would have.
What a seller concession actually is
A seller concession (also called a seller credit, seller assist, or closing cost help) is money you agree to put toward the buyer's costs at settlement. It's written into the agreement of sale and shows up as a credit on the closing statement.
It typically covers things like:
- The buyer's lender fees and title charges
- Prepaid items — homeowners insurance, property tax escrows, prepaid interest
- In some cases, discount points to lower the buyer's rate
What it can't do on a conventional loan: pay the buyer's down payment. Per the Fannie Mae Selling Guide, B3-4.1-02, seller contributions can't be used for the down payment, financial reserves, or the buyer's minimum contribution.
You don't get the money back. It comes out of your proceeds at closing, right alongside your own Delaware seller closing costs.
How much a buyer is allowed to get
This is where most sellers (and plenty of buyers) get tripped up. The cap isn't set by you or the buyer. It's set by the buyer's loan program.
Conventional loans (Fannie Mae guidelines)
Under the Fannie Mae Selling Guide, the limit for a principal residence or second home depends on the buyer's loan-to-value (LTV):
- Above 90% LTV (less than 10% down): 3%
- 75.01%–90% LTV (10% to just under 25% down): 6%
- 75% LTV or less (25% or more down): 9%
- Investment property: 2%, regardless of down payment
Those percentages are based on the lower of the sales price or the appraised value — a detail that matters a lot if the appraisal comes in short.
VA loans
According to the VA's own guidance on closing costs, seller concessions are limited to no more than 4% of the home's reasonable value (the value on the VA Notice of Value). VA counts things like paying the buyer's VA funding fee, paying off the buyer's debts, or prepaying their hazard insurance as concessions. VA also says it doesn't limit credits for the loan's closing costs — so a seller paying a VA buyer's normal closing costs is treated differently from those extras. Your buyer's lender will sort out which bucket each dollar falls in.
USDA loans
USDA Rural Development loans are common in eligible rural areas. Per USDA's HB-1-3555, Chapter 6, seller and other interested-party contributions are limited to six percent of the sales price. Seller-paid repairs (which must be escrowed) and the buyer's real estate commission are not counted toward that limit.
FHA loans
Under HUD Handbook 4000.1, seller and other interested-party contributions on an FHA loan are capped at 6% of the sales price. That money can go toward the buyer's closing costs, prepaid items, and discount points, but it can't cover the buyer's 3.5% minimum down payment. Anything over 6% is treated as an inducement to purchase and reduces the value the lender uses for the loan.
Bottom line: before you counter, find out exactly what loan the buyer is using and how much they're putting down. That one fact tells you the ceiling.
Concession vs. price cut: the trade-off nobody explains
Here's a simple, hypothetical example. You list at $400,000. The buyer offers either:
- Option A: $400,000 with a $12,000 seller concession, or
- Option B: $388,000 with no concession
On the surface, they look identical. They aren't.
Why Option A can be better for you:
- Your contract price stays higher. That matters for the comparable sales your neighbors (and future appraisers) see — and for your own sense of what you sold for.
- The buyer may be able to afford the house only with Option A. Plenty of buyers have the income for the payment but not the cash for closing. A $12,000 credit can be the difference between an offer that closes and one that falls apart.
Why Option A can be worse for you:
- The appraisal has to come in at $400,000, not $388,000. If it comes in low, you're renegotiating — and the concession limits are calculated on the lower appraised value. (More on that in our breakdown of what happens when an appraisal comes in low in Delaware.)
- Costs that are figured on the sale price — like Delaware's realty transfer tax and any percentage-based commission — are calculated on $400,000, not $388,000. On a straight price cut, those costs drop a little. On a concession, they don't.
- The credit can be bigger than the buyer's actual closing costs. Under Fannie Mae's guidelines, contributions that exceed the buyer's closing costs are treated as a sales concession, and the excess must be deducted from the sales price for loan purposes. In plain English: an oversized credit doesn't put extra cash in the buyer's pocket, and it can create problems for the loan.
Where the obvious answer is wrong: a lot of sellers assume a price cut is always "cleaner." But if the buyer genuinely needs closing-cost help to close, a price cut doesn't solve their problem — it lowers their loan amount, but they still need the cash at the table. And a lot of buyers assume a bigger credit is always better, when the cap and their real closing costs may make part of it useless.
How I'd handle a concession request
When a buyer asks for help with closing costs, here's the order I work through with my sellers:
- Confirm the loan type and down payment. That sets the maximum allowed.
- Ask for the buyer's lender estimate of closing costs. There's no reason to credit $15,000 if their costs are $9,000.
- Run your net sheet both ways — concession vs. price reduction — including realty transfer tax and commissions.
- Pressure-test the appraisal. If the comparable sales don't support the contract price, a concession is just a future renegotiation waiting to happen.
- Use "up to" language. Writing the credit as "up to" a dollar amount helps avoid leaving money stranded if the buyer's actual costs come in lower — confirm the exact wording with the settlement attorney.
- Think about timing. If you're debating whether to accept a concession now or hold out for spring buyers, that's a bigger conversation — see should you sell your Delaware home now or wait for spring.
Buyers reading this: the flip side applies to you too. Ask your lender for a closing-cost estimate before you write the offer, and check out our guide to Delaware buyer closing costs so you know what you're asking the seller to cover.
Frequently Asked Questions
How much can a seller pay toward a buyer's closing costs in Delaware?
It depends on the buyer's loan, not on Delaware law. Conventional loans following Fannie Mae allow 3%, 6%, or 9% for a primary residence depending on the down payment, VA caps seller concessions at 4% of reasonable value, and FHA and USDA both cap interested-party contributions at 6% of the sales price.
Can seller concessions be used for the buyer's down payment?
Not on a conventional loan following Fannie Mae guidelines. Seller contributions can't be used for the down payment, financial reserves, or the buyer's minimum contribution — they're for closing costs and prepaid items.
Is a seller concession better than lowering the price?
It depends. A concession keeps your contract price higher and can help a cash-tight buyer close, but the appraisal must support the higher price, and price-based costs like realty transfer tax are figured on the higher number. Run a net sheet both ways before deciding.
What happens if the seller credit is more than the buyer's closing costs?
Under Fannie Mae guidelines, contributions above the buyer's actual closing costs are treated as a sales concession and deducted from the sales price for loan purposes. The buyer doesn't get the excess as cash, which is why "up to" language is common.
Does the appraisal affect how much the seller can contribute?
Yes. For conventional loans, Fannie Mae calculates the contribution limit on the lower of the sales price or the appraised value. If the appraisal comes in low, the allowed credit can shrink and the deal may need to be renegotiated.
How much can a seller contribute on an FHA loan?
Up to 6% of the sales price under HUD Handbook 4000.1. The credit can cover closing costs, prepaid items, and discount points, but not the buyer's 3.5% minimum down payment.
Does paying the buyer's agent commission count toward the USDA 6% limit?
No. USDA's HB-1-3555, Chapter 6, excludes seller-paid buyer's agent commission and escrowed repairs from the 6% interested-party contribution limit.
The bottom line
A request for closing-cost help isn't a red flag — it's a negotiating lever. The right answer depends on the buyer's loan, their real closing costs, your appraisal risk, and your net. Get those four numbers in front of you, and you'll know whether to say yes, counter, or offer a price reduction instead.
This is exactly the kind of decision I walk my sellers through on every offer — with a side-by-side net sheet, not a guess. If you're curious where you stand, request your free Home Equity Report — it'll show you your home's current value, how much equity you've built, and what's happening with prices and inventory right in your neighborhood. Get your free report at search.teamsordelet.com/seller.
Team Sordelet and David Sordelet are licensed real estate professionals, not attorneys, accountants, or financial advisors. This article is general information, not legal, tax, or financial advice. Every situation is different — consult a qualified attorney, CPA, or lender about your specific circumstances before making decisions.
About David Sordelet
Looking for a trusted real estate professional in Delaware or Maryland who can help you make smart choices? Look no further than David Sordelet, Designated Broker of Real Broker Delaware and Team Leader of Team Sordelet.
With over two decades of experience, 1,000+ successful transactions, and 200+ five-star client reviews, David is recognized as one of the region's leading real estate experts. As the Designated Broker in Delaware and a licensed agent in Maryland, he provides unmatched knowledge of Wilmington, Newark, Hockessin, Dover, Middletown, and the Maryland Eastern Shore.
David understands that in real estate, who you work with matters most. That's why he combines personalized service, clear communication, and expert negotiation with the most modern marketing strategies and cutting-edge technology to achieve exceptional results for his clients.
Whether you're a first-time homebuyer, a move-up family, an investor, or a seller looking to maximize value, David Sordelet is the proven real estate professional you can count on.
License: RB-0031238-DE / 5013138-MD
