understanding it
The same dollars, two different shapes
A seller who gives you $10,000 can give it as a price reduction or as a concession, a credit toward your closing costs. The amounts are identical; the effects are not. This calculator runs the same dollars through both shapes and shows the difference side by side: the concession frees the full amount as cash on closing day, while the price cut lowers the monthly payment for the life of the loan and frees only your down-payment share of the amount at closing.
Why the concession dominates closing day
A credit offsets closing costs dollar for dollar, so a $10,000 concession is $10,000 you do not wire. A $10,000 price cut, at 10% down, only trims your down payment by $1,000; the rest of the reduction shrinks the loan, which you were financing anyway. For a buyer whose binding constraint is cash, and for most first-time buyers it is, the concession is worth several times its face value on the day it matters most.
Why the price cut wins the long game
The price cut is the gift that keeps paying: a smaller loan means a smaller payment every month until the loan ends. The concession does nothing for your payment. The crossover is the break-even this tool computes: the freed-up cash divided by the monthly savings. On typical numbers the break-even lands years out, often past a decade, which is longer than many buyers keep the loan before selling or refinancing. That comparison, your realistic time in the loan versus the break-even month, is the whole decision.
The caps nobody mentions until later
Loan programs cap seller concessions, and the cap depends on the program and your down payment. A concession negotiated above your cap gets cut down at underwriting, not preserved. Before you trade price for credits, ask your lender for the exact cap on your loan, and size the credit to your actual costs: a credit larger than what it can offset is money handed back. Sellers often prefer concessions too, since the higher recorded price supports the neighborhood's comps, which is one more reason this negotiation is usually available.
Common questions
Which is better, a concession or a price cut?
It depends on which constraint binds you. If closing-day cash is tight, the concession wins immediately: it frees the full amount now. If you will hold the loan for many years and cash is not the constraint, the price cut wins eventually through the lower payment. The break-even month this tool computes is the crossover.
Are seller concessions capped?
Yes. Loan programs limit how much a seller can credit toward your costs, and the limit varies by program and down payment. A concession that exceeds your program's cap gets reduced, not banked. Ask your lender for the cap that applies to your specific loan before negotiating the number.
Can a concession exceed my actual closing costs?
Generally no: credits apply against costs, prepaid items, and sometimes rate buydowns, and a credit larger than what it can legally offset is money left on the table. Size the concession to your real costs, which is another reason to run the cash to close number first.
Does a price cut lower my property taxes too?
In many places the purchase price feeds the home's assessed value, so a lower price can mean somewhat lower taxes and slightly cheaper title insurance. These effects are real but jurisdiction-specific, and this calculator does not estimate them; it compares the loan math, which is the dominant term.