When you're preparing to write your first offer in Texas, one term you'll hear a lot is seller concession. A seller concession is money the seller agrees to pay toward the buyer's closing costs, prepaid expenses, or loan fees as part of the purchase agreement. It reduces the cash you need to bring to the closing table without technically changing the purchase price—at least not on the surface. Think of it as the seller helping you cover transaction costs instead of cutting the price outright. Done correctly, a well-structured concession can save a buyer thousands of dollars on closing day while keeping the deal alive for both sides.

What Counts as a Seller Concession in Texas

Under the TREC One to Four Family Residential Contract—the standard form used for most Texas residential transactions—seller contributions are handled in Paragraph 12. This is where you'll specify exactly how much the seller is contributing and toward what.

Sellers can pay for a wide range of buyer costs, including:

  • Title insurance (owner's and lender's policies)
  • Escrow and settlement fees
  • Loan origination fees
  • Discount points to buy down the interest rate
  • Prepaid property taxes and homeowner's insurance escrow
  • HOA transfer fees and prepaid HOA dues
  • Home warranty premiums

What sellers generally cannot pay: the buyer's earnest money deposit, the buyer's down payment, or most inspection fees (unless your lender allows those to be rolled into a closing cost credit). The distinction matters because lenders scrutinize these line items carefully at closing.

Lender Caps on Seller Concessions

This is the most misunderstood part of seller concessions—and the part that can blow up a deal if you're not careful. Every loan program sets a maximum limit on how much a seller can contribute, expressed as a percentage of the purchase price or appraised value, whichever is lower.

Here are the current caps by loan type:

  • FHA loans: up to 6% of the purchase price
  • Conventional loans (LTV above 90%, meaning less than 10% down): up to 3%
  • Conventional loans (LTV between 75–90%): up to 6%
  • Conventional loans (LTV below 75%): up to 9%
  • VA loans: up to 4% plus reasonable and customary closing costs
  • USDA loans: up to 6%

One rule applies universally: the concession is capped at the lesser of the allowed percentage or your actual closing costs. If your lender approves 6% but your total closing costs only add up to 4%, you only receive credit for 4%. Concessions cannot flow to the buyer as cash back at closing. The appraisal must also support the full contract price—if the home doesn't appraise, the entire deal structure may need to be renegotiated.

Concession Caps Can Kill a Deal: If you request $15,000 in concessions on a $350,000 home but your actual closing costs are only $11,000, the lender will only apply $11,000. The extra $4,000 doesn't go to you—it simply disappears from the deal. Always verify your total closing cost estimate with your lender before deciding how much to request in the contract.

How Much Can You Ask For in DFW Right Now?

In 2026, the DFW market has softened enough that seller concessions are genuinely back on the table across many submarkets—something that wasn't true during the 2021–2022 run-up.

In higher-DOM zip codes where homes are averaging 40 or more days on market, buyers are routinely asking for 2–3% in concessions and getting them. In tight-inventory submarkets—think inner-ring neighborhoods and top-rated school districts—sellers still have enough leverage to push back or reject concession requests altogether.

A practical rule of thumb for 2026 DFW: 1–2% is reasonable in a balanced market. Requesting 3% or more is defensible when you have DOM data supporting it. Your agent should pull the average days on market for comparable sales in that specific zip code before you write the number into Paragraph 12.

How to Request a Concession in the Offer

The standard language in Paragraph 12 of the TREC contract reads something like: "Seller shall pay [X%] of the sales price toward Buyer's closing costs, prepaid items, and loan fees." That's it—simple and enforceable.

A few strategic notes:

  • Keep your offer price at or near list when requesting concessions. Sellers are far more receptive to a full-price offer with a concession than a low-ball price plus a concession request. Pick your battle.
  • In multiple-offer situations, dropping the concession request and competing hard on price and terms is often the winning move. You can always ask for a concession on your next offer.
  • Work with your lender to confirm the total concession amount won't exceed your actual closing costs before your agent writes the number in.
The Concession-to-Price Trade-Off: If a seller refuses to grant $10,000 in concessions, consider asking for a $10,000 price reduction instead. The financial impact at closing is similar, but a price reduction permanently improves your loan-to-value ratio—which can affect your mortgage insurance and long-term equity position. A concession only helps you on closing day; a price reduction helps you for the life of the loan.

When Concessions Are Worth Asking For

Seller concessions make the most strategic sense when:

  • You're cash-constrained after your down payment and need to preserve cash reserves
  • The home has been on market 30 or more days—a signal the seller has more flexibility
  • You're facing stacked closing costs: HOA transfer fees, title insurance, prepaid escrow, and loan fees can easily add up to $8,000–$12,000 on a mid-priced DFW home
  • Your lender has confirmed the appraisal will support the full contract price—requesting concessions on an already-tight appraisal adds risk
Ask Your Lender First: Before your agent writes a single number into Paragraph 12, get an updated **Loan Estimate** from your lender. That document will show your projected closing costs in detail—giving you the exact figure to work with when structuring your concession request.

Writing a concession into a Texas offer isn't complicated, but getting the number right requires coordination between your agent and your lender. Have your agent pull the DOM data for the neighborhood, confirm your closing cost estimate with your lender, and then structure Paragraph 12 to reflect a realistic, lender-compliant request. That combination—market data plus loan mechanics—is what separates a clean offer from one that falls apart at the title company.