DSCR Loan Seller Concession

Last updated: July 24, 2026

Most investors negotiate hard on price and then accept whatever the closing costs turn out to be. That is a mistake, because the closing table is one of the most negotiable parts of a purchase, and the seller can legitimately cover a meaningful share of it. On a DSCR loan purchase, a seller concession of up to 3% to 6% can shift thousands of dollars of transaction costs off your ledger and onto the seller's. Here is how seller concessions work on a DSCR loan, exactly what they can and cannot pay for, and how to actually get one agreed to.

What a Seller Concession Is

A seller concession is an agreed contribution from the seller toward the buyer's transaction costs. Rather than reducing the purchase price, the seller agrees to pay a portion of what you would otherwise owe at closing.

The distinction between a concession and a price reduction matters more than it appears. A price cut lowers the seller's headline number, which many sellers resist for emotional or comparative reasons. A concession lets the seller keep the number they are attached to while still delivering real economic value to you. That psychological difference is why concessions are often easier to negotiate than an equivalent discount, a point we will return to below.

The Limits: Up to 3% to 6%

On DSCR loan purchase transactions, borrowers can receive a seller concession of up to 3% to 6%.

The percentage is calculated on the lower of the property's sales price or its appraised value. That basis matters. If a property is under contract at $420,000 but appraises at $400,000, the concession is calculated against the $400,000 appraised value, not the contract price. Underwriting always works from the more conservative of the two figures.

Where you land within the 3% to 6% range depends on the institutional credit investor, the note buyer, that purchases the loan from OfferMarket after origination. Different note buyers maintain different concession limits, so the applicable cap on your deal is a function of which note buyer's guidelines your scenario fits. This is worth surfacing early, because if you are counting on a 6% concession and your scenario lands with a note buyer capped at 3%, you will want to know before you write it into a purchase agreement.

To put the range in dollar terms:

These figures assume the sales price is the lower of price and appraised value.

What a Concession Can Pay For

Seller concessions may be applied toward four categories of cost.

Closing costs, meaning lender fees, title fees, and the other transaction expenses that accompany a financed purchase.

Prepaid expenses, such as prepaid property taxes and insurance collected at closing.

Discount points, which are worth highlighting because they are strategically interesting. Using concession dollars to buy down your interest rate converts a one-time seller contribution into a permanently lower monthly payment. On a DSCR loan, a lower payment also improves your debt service coverage ratio, which can strengthen the deal's qualification picture. For a long-term hold, this is often the highest-value use of concession dollars.

Other financing concessions, covering the remaining eligible financing-related costs of the transaction.

What a Concession Cannot Pay For

Here is the limitation that surprises investors most: a seller concession cannot be applied toward your down payment.

Concessions offset transaction costs, not equity. Your down payment represents the equity you are putting into the property, and it must come from you. So while a 6% concession on a $400,000 purchase can wipe out $24,000 of closing costs, prepaids, and points, your 20% down payment, or 15% if you qualify for the 85% LTV tier, remains your responsibility.

This distinction is also why a seller concession does not count toward the borrower's minimum contribution when using gift funds. If you are combining assistance strategies, our guide to DSCR loan down payment assistance explains how gift funds work alongside concessions, including the 5% minimum contribution the borrower must make personally.

Purchases Only

Seller concessions apply to purchase transactions only. They are not available on refinances, which follows logically, since a refinance has no seller. If you are refinancing an existing property, concessions are not part of the picture, and your cash requirement will be driven by the loan's LTV limits and your closing costs.

Concessions Do Not Replace Your Reserves

One more planning point. Reserves are a separate requirement from cash to close, and a seller concession does nothing to satisfy them.

DSCR guidelines require verification that you hold 3 to 9 months of PITIA in reserve, or 12 months for foreign national borrowers. A concession reduces the money you need at the closing table, but you still must independently demonstrate the reserve liquidity. The reassuring part, covered in our guide to DSCR loan reserve requirements, is that reserves are typically verified rather than surrendered. You show recent bank, brokerage, or retirement account statements, and you keep your money.

Seller Concession Rules at a Glance

How to Actually Get a Concession Agreed To

A concession is a negotiated term of your purchase contract, not something the lender hands out. You have to ask for it, and how you ask matters.

Lead with the seller's number. The most effective framing is that the seller keeps their price. If a seller is anchored at $400,000 and you ask for $380,000, you are attacking the number they care about. If you offer $400,000 with a 6% concession, they keep their headline price and their comparable-sale record while you capture roughly $24,000 of value. Economically the two are similar for you. Psychologically they are entirely different for the seller.

Target the right sellers. Concessions land most easily with motivated sellers. A listing that has been sitting for months, a seller who has already moved, an estate sale, or a tired landlord will be far more receptive than a fresh listing with multiple showings. Days on market is your best single signal.

Ask in the offer, not later. Write the concession into your initial purchase agreement rather than raising it after acceptance. Introducing it late reads as renegotiation and erodes trust. Stating it up front makes it a term of the deal that the seller evaluates alongside price.

Know your cap before you write it. Since the limit depends on the note buyer, confirm what your scenario supports before committing to a percentage in the contract. Writing in a 6% concession that your loan can only accept at 3% creates a problem you will have to unwind later.

Watch the appraisal. Because concessions are calculated on the lower of sales price or appraised value, a low appraisal shrinks your maximum concession at the same time it creates other complications. Build some cushion into your expectations rather than planning to the exact maximum.

Use it on points when you can. If your closing costs and prepaids do not consume the full concession, directing the remainder to discount points buys down your rate for the life of the loan. On a long-term rental hold, that recurring benefit typically outweighs a one-time cost offset.

Why This Matters for Investors

Capital efficiency is what determines how quickly an investor can grow. Every dollar you do not spend at one closing is a dollar available for the next acquisition, a renovation budget, or reserves.

A seller concession is one of the few tools that reduces your cash requirement without increasing your leverage, raising your rate, or requiring help from family. It comes from the other side of the transaction entirely. Stacked with other strategies, such as gift funds or a lower down payment tier, the total capital needed to acquire a rental property can be considerably less than the traditional expectation. For the full picture of what drives your cash requirement, including credit, loan size, leasing strategy, and property type, see our guide to the DSCR loan down payment.

Closing Thoughts

On a DSCR loan purchase, a seller concession of up to 3% to 6%, calculated on the lower of sales price or appraised value and capped according to the note buyer purchasing your loan, can be applied toward closing costs, prepaid expenses, discount points, and other financing concessions. It cannot be applied toward your down payment, it is not available on refinances, and it does not satisfy your separate reserve requirement of 3 to 9 months of PITIA. The concession is negotiated into your purchase agreement, which means the leverage is yours to create: give the seller their price, ask for the concession, target motivated sellers, and consider directing leftover dollars to discount points for a permanently lower payment. It is one of the cleanest ways to reduce your cash to close without changing anything about your loan.

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