Michigan purchase strategy
Can the Seller Pay My Closing Costs in Michigan?
Often, seller-paid costs can be part of a purchase transaction, but the amount and permitted use depend on the loan program, occupancy, property value and the way the contract is structured.
A seller credit is negotiated—not free money
The buyer and seller agree to the purchase price and any seller-paid costs in the contract. The credit can reduce the buyer's cash burden, but it is still part of the economics of the transaction.
In a competitive market, a request for seller-paid costs can affect how the seller evaluates the offer.
Program rules matter
Conventional, FHA, VA and other programs have different limits and definitions for interested-party contributions or concessions. The transaction must be structured within the applicable rules.
The appraisal also matters because financing is tied to the supported property value and the approved transaction terms.
Use the credit strategically
A seller credit may be used for eligible closing costs, prepaid items or, in some structures, a temporary or permanent interest-rate buydown. The best use depends on the buyer's cash position and expected time in the loan.
Run the numbers before writing the offer
A slightly higher price with a seller credit can sometimes help a cash-constrained buyer, but it only makes sense when the appraisal, payment and total economics still work.
Related Michigan mortgage resources
What would a $6,000 seller credit actually change?
Hypothetical example: on a $300,000 purchase with 5% down, the down payment is $15,000. Suppose eligible closing costs and prepaid items total $9,000. Before considering deposits already paid or other adjustments, the combined amount is $24,000. An approved $6,000 seller credit toward those costs would reduce that amount to $18,000. The down payment remains $15,000.
That credit is not a $6,000 check you can keep. The lender must approve its use, the contract must support it, and your final costs must justify it. Earnest money, costs paid before closing, tax prorations and other credits affect the final cash-to-close calculation.
Check the limit before negotiating the credit
For a Fannie Mae conventional principal residence or second home, financing-concession limits depend on the loan-to-value or combined loan-to-value ratio: more than 90% generally allows 3%; 75.01–90% allows 6%; and 75% or less allows 9%. Investment-property financing has a 2% limit. These are program limits, not amounts a seller must agree to pay.
The percentage uses the lower of the sales price or appraised value, and the contribution cannot exceed eligible closing costs. Fannie Mae does not permit these contributions to cover the borrower's down payment or reserves. Read the Fannie Mae interested-party contribution rules. FHA, VA and other programs have their own definitions; confirm the selected program before applying a conventional percentage.
A price reduction and a credit solve different problems
A price reduction lowers the price and may lower the loan balance. A credit primarily helps with permitted upfront costs. If you offer a higher price to obtain a credit, the property still needs to support that price and the payment still needs to fit. Compare both offers before signing.
I would ask three questions: How much credit can the program and actual costs support? What will the monthly payment be? How much cash will you have after closing? Do not assume unused credit can become cash back.
For the next calculation, see the $300,000 payment examples and cash-needed guide. My minimum mortgage credit score is 580; programs and lenders may require more, and a score alone does not guarantee approval.
By Mike Alkema · Michigan Mortgage Broker · NMLS #642953 · Leeward Point Mortgage LLC, Company NMLS #1823590. Updated and source checked October 8, 2026.
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Mike Alkema helps Michigan buyers compare payment, cash-to-close, fees and available loan structures before they commit.
Call/Text: 616-319-1640 | Mike Alkema · NMLS #642953
Leeward Point Mortgage LLC · Company NMLS #1823590 · Licensed to do business in the State of Michigan · Equal Housing Opportunity. This material is educational and is not a commitment to lend. Loan programs, rates, terms and eligibility are subject to change and to borrower, property and underwriting approval.