Can the Seller Pay My Closing Costs in Texas?

Yes. In Texas a seller can pay some or all of your closing costs, and in El Paso many of them do. The amount is capped by your loan type, not by state law: Federal Housing Administration loans allow up to six percent of the sale price, Veterans Affairs loans allow up to four percent in certain concessions plus normal closing costs, and conventional loans allow three to nine percent depending on your down payment.

This is the single most useful negotiation tool for a buyer who is short on cash rather than short on income, which describes most first time buyers I work with. It is also the tool most people never ask about.

The Limits by Loan Type

Federal Housing Administration: up to 6 percent of the sale price. On a $250,000 home that is $15,000, which in practice covers all normal closing costs and prepaid escrow with room left over. This is the most generous common program.

Veterans Affairs: normal closing costs plus up to 4 percent in concessions. The Department of Veterans Affairs treats the two separately. The seller can pay your customary closing costs without that counting toward the four percent, and the four percent applies to things like paying off your debts, prepaid taxes and insurance, or a funding fee. This is more flexible than most people realize.

Conventional with less than 10 percent down: 3 percent. On $250,000 that is $7,500.

Conventional with 10 to 25 percent down: 6 percent.

Conventional with more than 25 percent down: 9 percent.

Investment property: 2 percent regardless of down payment.

One rule applies across all of them: seller concessions cannot exceed your actual costs. If you negotiate $10,000 and your total closing costs are $8,200, you do not pocket the difference. Anything left over is either lost or redirected, usually into a rate buydown, which is why the buydown option matters.

What Concessions Can Actually Pay For

• Lender origination, underwriting, and processing fees
• The appraisal
• Title policy and title company fees
• Survey
• Recording and government fees
• Prepaid property taxes and homeowners insurance going into escrow
• Prepaid interest
• Discount points to lower your interest rate
• On a Veterans Affairs loan, paying off buyer debts to help qualify

What they cannot pay for: your down payment. That money has to come from you, a gift, or an assistance program. The down payment breakdown on a $250,000 house separates the two.

How to Actually Ask for It

The mechanics matter more than the concept.

Build it into the offer price, do not bolt it on. If a house is listed at $250,000 and you need $8,000 in help, an offer of $250,000 with $8,000 in seller paid costs nets the seller $242,000. An offer of $258,000 with $8,000 in costs nets them the full asking price. The second one gets accepted more often and costs you about $45 per month on the mortgage. The catch is that the house still has to appraise at $258,000, so this only works when there is room in the comparable sales.

Ask for a dollar amount, not a percentage. Clean and unambiguous at closing.

Time it right. A house that has been on the market 60 days is a much better candidate than one listed last week. In El Paso, where homes take around 50 days to sell, days on market is your leverage.

Ask your lender for the estimate first. Request the amount you actually need. Asking for $15,000 when your costs are $7,000 looks unserious and wastes the difference.

Concessions Versus a Price Reduction

If a seller offers you a choice, here is how to think about it.

A $10,000 price reduction on a $250,000 house saves you roughly $57 per month on the mortgage. A $10,000 concession saves you $10,000 in cash today.

If cash is your constraint, take the concession every time. If you have plenty of cash and plan to stay fifteen years, the price reduction is worth slightly more over the long run. Most first time buyers are in the first category, and it is not close.

There is a third option that often beats both: ask the seller to buy down your rate permanently. Ten thousand dollars in discount points on a $250,000 loan can lower your rate by roughly one percentage point, which is close to $150 per month for thirty years. That is far more than the $57 a price cut buys. The buy now or wait for rates guide walks through the tradeoff.

What Sellers Think About This

Understanding the other side helps you ask better.

Sellers care about net proceeds and about the comparable sales their price sets for the neighborhood. A concession lets them keep a higher recorded sale price while giving you real money, which many sellers prefer to a price cut. Builders in particular almost always prefer concessions for exactly this reason, which is why new construction incentives are structured as closing cost help rather than price reductions.

Sellers who are relocating, who have already bought another home, or whose property has sat unsold are the most receptive. Sellers in week one of a well priced listing are the least.

If you are on the selling side of this question, the seller's closing cost guide covers what it actually costs you.

Frequently Asked Questions

How much can a seller contribute to closing costs in Texas?

It depends on the loan. Federal Housing Administration allows six percent of the price, conventional allows three to nine percent depending on down payment, and Veterans Affairs allows customary closing costs plus up to four percent in additional concessions. Texas law does not set its own cap.

Can the seller pay my down payment?

No. Seller concessions can cover closing costs, prepaid escrow, and discount points, but the down payment must come from you, a documented gift, or a down payment assistance program.

What happens if the seller agrees to more than my closing costs?

Excess concessions cannot be paid to you in cash. The usual solution is to apply the remainder to discount points that lower your interest rate, or to reduce the amount requested and lower the price instead.

Is it better to ask for a lower price or closing cost help?

If cash to close is your constraint, take the closing cost help. A $10,000 concession is $10,000 today, while a $10,000 price cut saves roughly $57 a month. If you have ample cash and a long time horizon, the price reduction edges ahead.

Do sellers in El Paso actually agree to this?

Frequently. With homes averaging around 50 days on market, most sellers would rather contribute a few thousand dollars than restart their listing. Days on market is your best indicator of who will say yes.

Does the house still have to appraise if I raise my offer to cover concessions?

Yes. If you offer above asking to fund a concession, the appraisal must support the higher number. Your agent should check comparable sales before structuring the offer that way.

The Bottom Line

Seller paid closing costs are normal, legal, and common in El Paso, and they solve the actual problem most buyers have, which is cash at closing rather than monthly payment. Ask for the amount you need, ask on a listing that has been sitting, and consider putting the money into a rate buydown instead of just covering fees.

If you want to know how much to ask for on a specific house, send me the address and I will price the concession against the days on market before you write the offer.