FHA seller concessions: 6% is generous—but it does not mean the seller can pay anything.
FHA separates legitimate interested-party contributions toward eligible costs from inducements to purchase that can reduce the property's adjusted value.
The 6% rule
Interested parties may contribute up to 6% of the sales price toward the borrower's origination fees, eligible closing costs, prepaid items and discount points. FHA's current definition includes sellers, real estate agents, builders, developers, mortgagees, TPOs and other parties with an interest in the transaction.
Buydowns and payment supplements
The 6% interested-party limit also captures qualifying interested-party payments for permanent and temporary interest-rate buydowns and other payment supplements under the Handbook.
What happens above 6%?
Amounts exceeding FHA's permitted contribution rules can affect the adjusted value/maximum mortgage calculation rather than simply being ignored.
Inducements to purchase
Cash back, excessive personal-property concessions or other benefits intended to induce the purchase can receive different FHA treatment and may reduce the adjusted value dollar-for-dollar. Ordinary seller-paid eligible closing costs are not automatically an inducement.
Official FHA policy baseline
Primary source: HUD/FHA Single Family Housing Policy Handbook 4000.1. HUD identifies it as the consolidated, comprehensive source of FHA Single Family policy; the current update was published August 12, 2026.