← Back to Conventional Home Loan Guide
When buying a home in Kansas or Missouri, the purchase price is only one part of the equation. Closing costs can add thousands to your upfront expenses. One of the most effective ways to reduce your out-of-pocket costs is through Seller Concessions (also known as Seller Interested Party Contributions or IPCs).
In a conventional loan, there are strict federal limits on how much a seller can contribute toward your costs. For a full list of what else you’ll need for your application, see our Documentation Checklist.
I. What are Seller Concessions?
Seller concessions occur when the seller agrees to pay a portion of the buyer’s closing costs. Instead of the money going into the seller’s pocket as profit, it is credited back to the buyer at the closing table.
What Concessions Can Cover:
- Loan origination fees and discount points to lower your interest rate.
- Appraisal and credit report fees.
- Title insurance and attorney fees.
- Recording fees and transfer taxes.
- Prepaid items like homeowners insurance and property tax escrows.
- 2026 Update: Concessions can now cover up to 12 months of HOA assessments covering periods after the settlement date.
Note: Seller concessions cannot be used toward your down payment. They can only be applied to closing costs and pre-paid items.
II. 2026 Conventional Seller Concession Limits
Unlike FHA loans, which have a flat 6% cap, Conventional loan limits are tiered based on your Loan-to-Value (LTV) ratio—essentially, how much you are putting down. These limits apply to the 2026 baseline loan limit of $832,750.
III. Strategic Use of Concessions in Kansas City
In a competitive market like Overland Park or Kansas City, using concessions strategically can make your offer more attractive while keeping your cash-to-close low.
- The 2-1 Buy-Down: Fund a temporary rate reduction to lower your monthly payment for the first two years.
- Offsetting PMI: Use concessions to pay for a “Single-Premium PMI” policy, eliminating your monthly mortgage insurance payment entirely.
- Managing DTI: If your DTI ratio is tight, concessions can buy down your permanent rate to help you qualify.
IV. Important Note: The Appraisal Rule
Seller concessions are limited by the lesser of the sales price or the appraised value. If you negotiate a 3% credit based on a $400,000 price ($12,000), but the home appraises for $390,000, your maximum concession is 3% of $390,000 ($11,700). Lenders will not allow a “kickback” of overage funds to the borrower.
GET A PERSONALIZED CLOSING COST ESTIMATE