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Buyer guide
Closing cost rebate vs. seller credit: what's the difference?
Both lower your cash to close, but they come from different places. A seller credit comes out of the seller's proceeds and can weaken your offer. A closing cost rebate comes from your agent's commission and doesn't.
Reviewed by Bryan Berns, Florida real estate broker (License BK3659524), licensed since 2011 · Updated October 2026Side by side
| Seller credit | Closing cost rebate | |
|---|---|---|
| Who pays | The seller | Your agent's commission |
| Effect on your offer | Can make it less attractive | None: seller nets the same |
| Needs negotiation | Yes | No, it's in your buyer agreement |
| Lender approval | Yes, within limits | Yes, within limits |
| Can you use both? | Yes, within combined lender limits | Yes |
Using both together
Many buyers ask for a seller credit and also get a rebate. The catch: loan programs cap total credits from interested parties, so both together can't exceed your loan's limit or your actual closing costs. See loan limits.
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Rebate vs. seller credit FAQ
Which is better in a competitive market?
A rebate, because it doesn't reduce what the seller nets.
What if my credits exceed my closing costs?
Lenders generally won't let credits exceed actual costs. Extra may be lost, so plan with your lender.
Can a builder give a credit and I still get a rebate?
Usually, yes, subject to the lender's limits.
Example: the same $400,000 purchase, three ways
| Seller credit only | Rebate only | Both | |
|---|---|---|---|
| Offer price | $400,000 | $400,000 | $400,000 |
| Seller credit | $8,000 | $0 | $4,000 |
| Seller's net (before other costs) | $392,000 | $400,000 | $396,000 |
| Rebate from a 3% commission | $0 | $6,000 | $6,000 |
| Total credits toward your costs | $8,000 | $6,000 | $10,000 |
Illustration only. Your lender must approve all credits, and totals can't exceed your loan program's limits or your actual allowable costs. Commissions are negotiable and every situation is different.
How to decide which to ask for
In a seller's market, a request for a large credit can make your offer less competitive, because it lowers what the seller nets. A rebate doesn't touch the seller's proceeds, so your offer looks the same as any other at that price.
In a slower market, or on a home that's been listed a while, asking for a seller credit can be easy to win. Combined with a rebate, it can cover most or all of your closing costs. The limit is your loan: conventional, FHA and VA loans each cap credits from interested parties, and no credit can exceed your actual allowable costs.
New construction works similarly: builder incentives play the role of a seller credit. See FHA, VA and conventional limits, Florida closing costs and our rebate example.
More credit questions
Is a rebate taxable?
The IRS has generally treated buyer rebates as a reduction in purchase price rather than income, but talk with a tax professional about your situation.
Can a seller credit pay for repairs?
Lenders usually don't allow credits for repairs. Credits go toward closing costs and prepaid items; repair issues are better handled through price or seller-completed repairs.
What if credits exceed my costs?
The excess is typically lost or must be restructured. We plan the amounts with your lender before you sign.
Get a rebate that keeps your offer strong
Your rebate comes from our side, so the seller nets the same. Start here.
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