What Is a Closing Cost Credit in NH Real Estate?

🏡 What Is a Closing Cost Credit in NH Real Estate?

In New Hampshire real estate, a closing cost credit is one of the most common negotiating tools used to keep a transaction together. Instead of lowering the purchase price or completing repairs, the seller offers the buyer a credit applied directly toward closing costs.

This strategy helps both sides reach the finish line — especially when interest rates, repair needs, or affordability concerns come into play.

Here’s how closing cost credits work in NH.

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What Is a Closing Cost Credit?

A closing cost credit is money the seller agrees to contribute toward the buyer’s closing expenses.

It appears as a credit to the buyer and a debit to the seller on the settlement statement at closing.

This credit does not reduce the purchase price.

Instead, it reduces how much cash the buyer needs at the closing table.

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What Can Closing Cost Credits Be Used For?

Buyers in NH can use seller closing cost credits for:

✔ Lender fees

✔ Title and attorney fees

✔ Appraisal fees

✔ Prepaid property taxes

✔ Homeowners insurance premiums

✔ Escrow setup

✔ Mortgage discount points (rate buy-down)

⚠️ Most loan types do not allow credits to be used for the down payment.

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Why Buyers Request Closing Cost Credits

Closing cost credits help NH buyers:

✔ Reduce out-of-pocket expenses

✔ Free up cash for repairs or moving costs

✔ Afford a higher interest-rate environment

✔ Offset inspection issues

✔ Buy down their mortgage rate

For first-time buyers in Plymouth, Campton, Thornton, Rumney, and surrounding towns, these credits can be a major financial advantage.

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Why Sellers Offer Closing Cost Credits

Sellers may choose to offer credits because they:

✔ Keep the deal alive after inspection issues

✔ Avoid completing repairs

✔ Attract more buyers in a slower market

✔ Help buyers qualify more easily

✔ Maintain their desired sale price (important for appraisal)

It’s often easier than reducing the price or arranging repairs.

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How Lender Limits Affect Credits

Lenders cap seller credits depending on loan type:

Conventional: 3%–6%

FHA: Up to 6%

VA: Up to 4%

USDA: Up to 6%

Credits cannot exceed the buyer’s actual closing costs, even if the allowed percentage is higher.

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Closing Cost Credit vs. Price Reduction

Closing Cost Credit

✔ Helps buyer immediately

✔ Reduces cash needed at closing

✔ Keeps appraisal safer

Price Reduction

✔ Lowers mortgage amount slightly

✔ Doesn’t directly reduce buyer’s upfront cash needs

In many NH deals, the credit benefits the buyer more — especially when cash is tight.

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Bottom Line

A closing cost credit is a powerful tool for NH buyers and sellers. It reduces the buyer’s upfront expenses while helping the seller keep the deal on track without cutting their price. When used strategically, both sides win.

Jim Johnson — Real Estate Agent

58 NH Route 25A

Wentworth, NH 03282

P: (857) 249-7392

W: www.JimJohnsonRealEstateAgent.com

Licensed New Hampshire REALTOR® with Three Hills Real Estate Services

Broker Email: info@ThreeHillsRES.com

Broker Website: www.ThreeHillsRES.com