VA Seller Concessions The 4% rule, and what it really covers

What can a seller pay on a VA loan?

Two separate lanes. The first is standard, customary closing costs, which a seller can pay with no VA percentage cap. The second is concessions, which the VA caps at 4% of the appraised reasonable value. Because most of a buyer's costs live in that first uncapped lane, a seller can often contribute well beyond 4% in total.

What counts toward the VA 4% concession cap?

Concessions are the extras a seller is not customarily required to provide. On a VA loan these count toward the 4%:

• The VA funding fee
• Prepaid taxes and homeowners insurance
• Gifts, such as included appliances
• A temporary buydown escrow
• Discount points above the market rate
• Payoff of the buyer's credit balances or judgments

What does not count toward the 4%?

Standard, customary closing costs are not concessions and are not subject to the 4% cap:

• Title and settlement fees
• The appraisal
• Recording fees
• Lender origination within the VA 1% limit
• Market-customary discount points

The practical move is to apply seller dollars to this standard-cost lane first, then spend the 4% concession room on the items above.

What is the 4% measured against?

The 4% is calculated on the established reasonable value, which is the appraised value shown on the VA Notice of Value, not the sales price or the loan amount. If your reasonable value and your price are different, the cap follows the reasonable value.

Is everything on a VA loan capped at 4%?

No, and this is the single most common error in consumer content. A blanket 4%-on-everything cap is a lender overlay, not a VA rule. The VA caps concessions at 4%; it does not cap the standard closing costs a seller can pay. If a lender tells you 4% is the ceiling on all seller help, that is their overlay, and it is worth asking about.

What if I am exempt from the VA funding fee?

Veterans with a service-connected disability rating are generally exempt from the funding fee. Since the funding fee is usually the largest concession item, being exempt frees that whole slice of the 4% for other concessions, such as prepaids, a temporary buydown, or paying off a qualifying balance.

Can a veteran or seller pay the buyer's agent, and does it count?

A seller-paid buyer-agent commission is a cost of sale and does not count against the 4% concession cap. On the buyer-paid side, a veteran historically could not pay buyer-broker fees at all; under the temporary VA Circular 26-24-14, effective August 10, 2024, a veteran may pay certain buyer-broker charges when they are reasonable and customary, with a written buyer-broker agreement in the file, and the fee cannot be financed into the loan.

One careful point: the 2025 federal law often cited here did not make the veteran-paid allowance permanent. It directs the VA to report to Congress; it did not codify the fee rule. As of 2026 the operative authority is still the temporary circular, with permanent guidance expected through formal rulemaking. Confirm the current status with your lender.

More on agent pay: how real estate commission works.

VA seller concessions FAQ