VA Loans: How Seller Concessions Can Help Veterans Pay Off Debt and Close with Ease

 

Hey my fellow Veterans and Active Duty — did you know the VA allows sellers to pay up to 4% of the purchase price above and beyond normal closing costs to help you get into your new home?

That means sellers can do more than just cover your closing costs — they can also help you eliminate debt or even cover prepaid expenses.

Let’s break it down with a real-world example.

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Example Scenario

A Veteran wants to purchase a $300,000 home.

• Standard closing costs, including the VA funding fee, total about $10,000.

• The Veteran also owes $5,000 on a truck loan that’s impacting debt-to-income ratio.

• The seller agrees to a 4% seller concession (which equals $12,000 on a $300,000 purchase).

Here’s how the deal could be structured:

• Seller pays the $10,000 in normal closing costs, plus

• Up to $12,000 in additional concessions, which can go toward:

  • Paying off the $5,000 truck loan

  • Covering prepaid taxes and insurance

  • Paying the VA funding fee

  • Even providing a temporary rate buydown to reduce the first-year payments

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Why This Matters

This flexibility is one of the most powerful advantages of using your VA home loan benefit. The ability to apply seller concessions above your normal closing costs means:

• You can clear debts that might affect loan approval.

• You may bring little to no money to closing.

• You can position yourself for a stronger financial start as a new homeowner.

It’s important to remember that this 4% rule applies to seller concessions above standard closing costs. The seller can still pay all of your reasonable and customary closing costs, and then add another 4% in concessions.

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Pro Tip

When you’re writing your offer, work with a VA-savvy lender who understands how to structure the loan and collaborate with your Realtor to maximize these benefits. A well-written purchase contract can make all the difference between just buying a home — and buying one with financial breathing room.

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Bottom Line:
VA seller concessions can be a game changer. In the example above, our Veteran could close on a $300,000 home with $15,000 in total assistance — $10,000 for closing costs and $5,000 toward debt payoff — all while using the unmatched benefits of the VA loan program.

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