Buy
Two ways to ask a seller for the same amount of money. They don't do the same thing — one lowers what you owe, the other lowers what you bring to closing, and only one of them lowers the number the appraisal has to reach.
The same figure, requested two different ways.
Held as a percentage, so a lower price also lowers the dollars down.
Market-rate assumptionFreddie Mac 30-yr fixed average · week of Sep 24, 2026
Sets the mortgage-insurance estimate. Self-reported; nothing is checked.
Sets the contribution limit only. Loan mechanics stay conventional here — compare program fee structures on Compare Loan Options.
Conventional, 10% to under 25% down — limit 6% of price.
About $12,000 at this price.
Inspection, moving, setup. A seller credit can't cover these.
About $4,000 a year at this price.
About $1,400 a year at this price.
Your own target — nothing here judges whether it's the right one.
Option A
Needs the appraisal to support $390,000.
$11,300 left over.
Option B
Needs the appraisal to support $400,000.
$20,000 left over.
Your loan is sized against the lower of the purchase price or the appraised value. The price reduction lowers the number the appraisal has to reach; the credit does not. Here is Option B if the home appraises at $390,000 — the very price Option A treats as fair.
| A · Price reduction | B · Seller credit | B, appraised at $390,000 | |
|---|---|---|---|
| Purchase price | $390,000 | $400,000 | $400,000 |
| Starting loan | $351,000 | $360,000 | $351,000 |
| Cash at closing | $53,700 | $45,000 | $54,000 |
| Monthly payment | $2,863 | $2,936 | $2,874 |
A shortfall would need $9,000 more cash at closing than Option B assumes — $300 more than Option A would have needed. In practice the choices are to renegotiate, bring the difference in cash, or use an appraisal contingency to step back.
The tradeoff
The credit leaves $8,700 more in your pocket at closing. The price reduction lowers the payment by $73 a month — about 9.9 years to repay the cash difference. The credit's advantage is real, and it is conditional: it holds only if the home appraises at $400,000.
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A seller credit pays eligible closing costs only. It is not cash back, it cannot pay your down payment or reserves, and any part of it above your actual eligible costs simply goes unused — the price does not drop instead. Contribution limits are set by the loan program and, on conventional loans, by your down payment; this tool applies the limit but does not verify program eligibility, loan limits, income, credit or property condition. Both structures assume the seller agrees. Equal requests do not produce equal seller net proceeds: a price reduction lowers the sale price, which also lowers the basis on which agent commission is calculated, while a credit does not.
Sources: Fannie Mae Selling Guide · HUD Handbook 4000.1 · VA Lenders Handbook
Payments use a standard amortization at the illustrative rate, plus property tax and insurance as annual rates against the purchase price, HOA, and mortgage insurance estimated from loan-to-value and the selected credit range. The down payment is held as a percentage, so the reduced price also reduces the dollars down; a buyer working from a fixed dollar amount would see a different split. The seller contribution is capped at the lesser of the amount requested, the eligible closing costs, and the program limit. The appraisal scenario assumes the lender sizes the loan against the lower of price or appraised value while the buyer holds the same loan-to-value target, and that closing costs scale with the contract price. Mortgage-insurance figures are illustrative placeholders, not quotes.
Educational estimate. Not a quote, offer, approval, or a recommendation about how to structure an offer. Figures depend on the seller's agreement, lender review, and the appraised value, and assume a primary residence — contribution limits are lower for investment properties. Kinship Mortgage is a licensed broker. See calculator methodology.