{"@context":"https:\/\/schema.org\/","@type":"BlogPosting","@id":"https:\/\/www.getloans.com\/blog\/getting-a-seller-credit-in-lieu-of-repairs\/#BlogPosting","mainEntityOfPage":"https:\/\/www.getloans.com\/blog\/getting-a-seller-credit-in-lieu-of-repairs\/","headline":"Getting A Seller Credit In Lieu Of Repairs","name":"Getting A Seller Credit In Lieu Of Repairs","description":"Seller Credit Instead of Repairs: What Homebuyers Need to Know Updated September 2026 After a home inspection, a buyer and seller may agree that the seller will provide a credit instead of completing certain repairs. This can be convenient, but a seller credit is not the same as receiving cash to make repairs after closing. […]","datePublished":"2020-03-02","dateModified":"2026-09-11","author":{"@type":"Person","@id":"https:\/\/www.getloans.com\/blog\/author\/brianm\/#Person","name":"brianm","url":"https:\/\/www.getloans.com\/blog\/author\/brianm\/","identifier":2,"image":{"@type":"ImageObject","@id":"https:\/\/secure.gravatar.com\/avatar\/b03dd1a5c12d48f4023463adfa5dbd6d38ebf6f4d842bd8f8d55ec71cb0ca275?s=96&d=mm&r=g","url":"https:\/\/secure.gravatar.com\/avatar\/b03dd1a5c12d48f4023463adfa5dbd6d38ebf6f4d842bd8f8d55ec71cb0ca275?s=96&d=mm&r=g","height":96,"width":96}},"publisher":{"@type":"Person","name":"Brian Martucci","image":{"@type":"ImageObject","@id":"https:\/\/www.getloans.com\/wp-content\/uploads\/2026\/06\/brianmartucci-getloans-logo2017.webp","url":"https:\/\/www.getloans.com\/wp-content\/uploads\/2026\/06\/brianmartucci-getloans-logo2017.webp","width":400,"height":70}},"image":{"@type":"ImageObject","@id":"https:\/\/www.getloans.com\/wp-content\/uploads\/2020\/03\/Seller-Credit-Instead-of-Repairs.png","url":"https:\/\/www.getloans.com\/wp-content\/uploads\/2020\/03\/Seller-Credit-Instead-of-Repairs.png","height":941,"width":1672},"url":"https:\/\/www.getloans.com\/blog\/getting-a-seller-credit-in-lieu-of-repairs\/","about":["Underwriting Rules"],"wordCount":903,"keywords":["home inspection","home repairs","seller credits","seller credits for closing costs","seller credits to closing costs"],"articleBody":"Seller Credit Instead of Repairs: What Homebuyers Need to KnowUpdated September 2026After a home inspection, a buyer and seller may agree that the seller will provide a credit instead of completing certain repairs. This can be convenient, but a seller credit is not the same as receiving cash to make repairs after closing.A seller credit normally appears on the Closing Disclosure and reduces closing costs the buyer would otherwise pay at settlement. It generally cannot be used for the down payment, paid to the buyer as cash, or exceed the buyer\u2019s allowable closing costs.Seller credits are only one consideration when making an offer on a house or negotiating a sales contract. The proposed credit should be reviewed by the lender before the parties sign an addendum.Can a Seller Give a Credit Instead of Making Repairs?Yes, in many transactions. After an inspection, the parties might agree to:Have the seller make the repairs before closingReduce the purchase priceProvide a credit toward the buyer\u2019s allowable closing costsA seller credit may work well for cosmetic or nonessential repairs. However, it may not solve a health, safety, structural, insurability or appraisal problem. If a repair is required for the property to qualify for financing, a closing-cost credit does not eliminate that requirement.Termite damage can be particularly complicated. Depending on its severity and the loan program, treatment or repairs may be required before closing. Read more about solutions for termite damage when buying a home.How Does a Seller Credit Work?Assume an inspection identifies $7,500 in recommended repairs. Instead of completing the work, the seller agrees to provide a $7,500 credit.The credit might be applied to:Lender, title and settlement chargesPrepaid interest and homeowners insuranceDiscount points or an eligible interest-rate buydownIf the buyer has at least $7,500 in eligible costs, the full credit may be usable. If the buyer has only $5,000 in eligible costs, the remaining $2,500 generally cannot be given to the buyer as cash.Buyers should also understand the difference between seller credits and lender credits. Both can reduce the cash needed at closing, but they are funded and priced differently.How Should the Addendum Be Written?The addendum must accurately disclose the parties\u2019 agreement and comply with the sales contract, applicable law and mortgage requirements.A basic provision might read:Seller agrees to credit the buyer $________ at settlement toward the buyer\u2019s allowable closing costs, prepaid items and discount points, subject to the limitations and approval requirements of the buyer\u2019s mortgage lender.Send the proposed addendum to the lender before it is signed. The lender must determine whether both the credit and the property condition are acceptable.How Much Can a Seller Credit?For many conventional primary-residence and second-home loans, the general limits are:Above 90% LTV: 3%75.01% through 90% LTV: 6%75% LTV or lower: 9%Investment property: 2%FHA generally permits contributions of up to 6%. VA permits sellers to pay reasonable and customary closing costs, while a separate 4% limit applies to certain seller concessions.These limits are not the only restriction. The credit generally cannot exceed the buyer\u2019s actual eligible costs. Read more about maximum seller financing contributions or review Fannie Mae\u2019s current interested-party contribution rules.What If the Credit Is Too Large?The buyer generally cannot receive the unused amount in cash. Depending on the contract and lender approval, the parties might:Reduce the creditUse part of it for discount pointsUse an eligible interest-rate buydownReduce the purchase priceHave the seller complete certain repairsA price reduction lowers the price and possibly the loan amount, but it may not reduce the buyer\u2019s immediate cash requirement as much as a usable seller credit.Can the Seller Pay a Contractor Instead?Possibly, but the lender and settlement company must approve the arrangement. The lender may require estimates, invoices, a completion inspection or a formal repair escrow. The parties should never assume that paying a contractor directly allows them to avoid mortgage requirements.Frequently Asked QuestionsCan a seller credit be used for the down payment?Generally, no. It normally cannot satisfy the buyer\u2019s minimum down payment, required reserves or minimum borrower contribution.Can the buyer receive the credit as cash after closing?Generally, no. A separate check, gift card or undisclosed payment outside closing can violate mortgage requirements.Does the lender need the home-inspection report?A lender does not routinely require the complete inspection report. However, relevant addenda, financial concessions and known material property conditions should not be concealed.Can a seller credit be added after the inspection?Often, yes. The buyer and seller may sign an addendum after negotiating the inspection, but it should be submitted promptly to the lender.What if the appraisal requires repairs?The work may have to be completed before closing. A seller credit alone does not make an unacceptable property condition eligible.Can seller credits be used for furniture or gift cards?Generally, no. Furniture, moving expenses, gift cards, decorating allowances and similar giveaways may be treated as sales concessions rather than allowable closing-cost credits.The Most Important StepBefore signing an agreement involving repairs, seller credits, contractor payments or funds held after closing, send it to the loan officer.A quick review can prevent an unusable credit, underwriting delay, appraisal problem or postponed closing.To discuss a seller credit or a specific purchase transaction, schedule a call with me or email brian@getloans.com."}