VA Seller Concessions Calculator (4% Rule)
The VA caps seller concessions at 4% of the home’s established reasonable value (NOV). Many lenders also compare the purchase price. This calculator uses the lower of the two as a conservative cap basis, while keeping standard closing costs outside the cap.
4% seller concession limit calculator
Enter the purchase price and the VA reasonable value (NOV). This uses the lower number as the cap basis, totals items that count toward the cap, and tracks items that are excluded. You can type values like 350k, 1.2m, or $350,000.
What counts as a VA seller concession (and what doesn’t)
VA defines a seller concession as “anything of value” the seller adds where the buyer pays nothing extra and the seller isn’t normally expected to provide it. The 4% cap applies to concessions — not to normal closing cost credits.
| Item / example | Counts toward 4% cap? | Notes | Source |
|---|---|---|---|
| Seller pays VA funding fee | Counts | Counts toward the seller concession cap when paid on the buyer’s behalf. | VA Handbook (Ch. 8, Topic 5) |
| Prepaid property taxes and insurance | Counts | Seller-paid prepaids beyond what the seller is normally expected to pay are treated as concessions. | VA Handbook (Ch. 8, Topic 5) |
| Gifts (TV, microwave, appliances) | Counts | Items of value added to the deal where the buyer pays nothing additional can count. | VA Handbook (Ch. 8, Topic 5) |
| Extra points for permanent interest-rate buydown | Counts | “Extra” points used to permanently buy down the rate can be counted as concessions. | VA Handbook (Ch. 8, Topic 5) |
| Temporary buydown escrow (e.g., 2-1) | Counts | Escrowed funds used to create a temporary buydown are treated as concessions. | VA Handbook (Ch. 8, Topic 5) |
| Payoff of buyer debts/judgments | Counts | Paying the buyer’s credit balances or judgments is listed as a seller concession. | VA Handbook (Ch. 8, Topic 5) |
| Seller-paid closing costs | Excluded | Closing cost credits are allowed and excluded from the 4% concession total. | VA.gov + VA Handbook |
| Normal discount points (appropriate to market) | Excluded | Points that are appropriate to the market are excluded; only “extra” points are treated as concessions. | VA Handbook (Ch. 8, Topic 5) |
The seller can pay closing costs, but “seller concessions” (the extra stuff) are capped at 4% of reasonable value.
The NOV reasonable value is the core VA reference for the cap. This calculator uses the lower of NOV and purchase price as a conservative cap basis.
Examples (cap math in 10 seconds)
These show what counts vs what doesn’t, and why a deal can look “over 4%” when it isn’t.
Purchase: $400,000, NOV: $410,000 → cap basis: $400,000 → 4% cap: $16,000. Seller pays $6,000 closing costs (excluded) + $10,000 counted concessions → PASS.
Purchase: $305,000, NOV: $300,000 → cap basis: $300,000 → 4% cap: $12,000. Seller pays $14,000 counted concessions → FAIL (over by $2,000).
How the VA 4% rule works (the short version)
Most problems happen because the contract and disclosures treat “seller to pay everything” as one bucket. VA splits it into closing costs (allowed and not capped by percentage) and seller concessions (capped at 4%).
Ask for allowable closing costs first (excluded from the 4% cap), then reserve the capped 4% bucket for true concessions like funding fee payment, temporary buydown funds, or a debt payoff.
VA’s cap is tied to the home’s established reasonable value on the Notice of Value. If the NOV comes in lower than the price, your 4% cap shrinks immediately — re-run the math and adjust the deal fast.
- Formula: 4% cap = 0.04 × reasonable value (NOV). This tool uses the lower of NOV and purchase price as a conservative basis.
- Points matter: “Normal” points that are appropriate to the market are excluded. Extra points used to permanently buy down the rate are concessions.
- Temporary buydowns: Funds escrowed for a temporary buydown (like a 2-1) are treated as concessions and count toward the cap.
- Buyer-broker fees: If a fee is paid by the seller or structured as a credit, have the lender confirm how it will be classified and disclosed so it doesn’t accidentally consume your 4% bucket.
Next steps
Use this checklist to move from a rough idea to a clean, lender-ready concession plan.
- Get the NOV amount from your lender (VA Notice of Value) and enter it so the cap basis is accurate.
- List every seller-paid line item and decide: does it “count” (a concession) or is it “excluded” (closing costs / market points)?
- If you’re FAIL (over cap), reduce or re-structure counted concessions until you’re back within the 4% cap basis.
- Export and share the “Copy results” text or the calculation CSV with your agent/lender so everyone is working from the same numbers.
- Need help structuring it? Contact VA Loan Network.
Downloads & citation
Grab a CSV for reuse, or copy a ready-to-paste citation for referencing this tool.
VA Loan Network. “VA Seller Concessions Calculator (4% Rule).” Updated Dec 25, 2026. https://valoannetwork.com/4-percent-rule-on-va-loan/
FAQ
What is a VA seller concession?
What is the VA 4% seller concession limit based on?
Do seller-paid closing costs count toward the 4% cap?
Does paying the VA funding fee count as a concession?
Do discount points count toward the 4% cap?
Do temporary rate buydowns count toward the cap?
Does the seller paying off my debt count as a concession?
What happens if concessions exceed 4%?
Is the cap 4% of the loan amount or home value?
Can the seller pay fees besides concessions?
Sources
Primary references for definitions, included/excluded items, and the 4% limit.
- VA Lender’s Handbook M26-7 — Chapter 8, Topic 5 (Seller Concessions).
PDF - VA.gov — Funding Fee & Closing Costs (includes the 4% concession statement and “no limit” on closing cost credits).
VA.gov page - VA News — Real estate industry changes and VA home loan borrowers (broker fee context).
VA News post