We also need to talk briefly about another acceptable source of funds, and then we are done! VA looks at sellers concessions slightly differently. VA allows a 4% seller concession fee but it consists of only these items:

• Payment of the Veteran-buyer's funding fee
• Payment of the Veteran-buyer's prepaids (i.e. proration of real estate tax and hazard insurance)
• Payment of points above what is appropriate to the market (not standard discount points)
• Gifts such as new plasma screen television sets, cars, etc.
• Payment of points to provide for a temporary buy-down
• Pay off of credit balances or judgments on behalf of the Veteran

The 4% is based on the established reasonable value of the property. All of the other closing costs, e.g. the title insurance, title exam, Mortgage Electronic Registration System (MERS) fee, appraisal, origination fee, normal discount points, etc., can be paid by the seller and they don't count toward the concession.