Buy your home now. Don't make a payment for five months.
If you're using a VA, FHA, or USDA loan, seller credits can cover your first few mortgage payments. That means you close, move in, and have months to settle before a single dollar comes out of your account.
The Timeline
Five months visualized.
Here's exactly what happens when you close in April with 3 months of seller-paid payments.
Prepaid interest covers April 1 through April 30. No payment due.
Interest accrues all month. Covered by your June 1 payment (which the seller pays).
First mortgage payment due. Covers May's interest. Paid by seller credit.
Second payment due. Covers June's interest. Paid by seller credit.
Third payment due. Covers July's interest. Paid by seller credit.
Your first out-of-pocket mortgage payment. Five months after closing.
How It Works
The seller isn't writing you a check. Here's what actually happens.
Seller credits are negotiated as part of the purchase contract. The seller agrees to contribute a dollar amount (in this case, three months of payments) toward the buyer's costs at closing. Instead of applying that credit to closing costs or rate buydowns, we direct it toward prepaying your first few mortgage payments.
The credit is held in escrow and applied to each payment as it comes due. You never see the money. You just don't get a mortgage bill for those months.
Eligible loan programs
Conventional loans allow seller credits but cannot be used for prepaid mortgage payments. This strategy is specific to VA, FHA, and USDA financing.
Who This Is For
This strategy works best when timing matters.
PCS or military relocation
You're moving to the DMV on orders and need time to get settled before payments start. BAH covers the mortgage eventually, but seller-paid payments give you breathing room during the transition.
Breaking a lease
Your lease doesn't end for a few months, but you found the right home now. Seller-paid payments mean you're not doubling up on rent and a mortgage at the same time.
Cash reserves after closing
Buying a home is expensive beyond just the down payment. Three months of no mortgage payments gives you a cushion for furniture, repairs, or just rebuilding savings after closing.
Seasonal or income timing
If your income is seasonal, commission-based, or has a known ramp-up period, seller-paid payments can bridge the gap between closing and your next earnings cycle.
For Agents
Seller credits are more profitable than price reductions.
When a listing sits, most agents default to a price reduction. But a seller credit strategy can achieve the same buyer impact (lower monthly payment) while keeping more money in the seller's pocket.
Typical Price Reduction
Seller Credit Strategy
The seller profits $9,000 more. The buyer gets the same (or better) monthly payment. The listing moves.
Next Step
Let's see if this fits your deal.
Whether you're a buyer wondering how to stretch your budget or an agent looking for a creative listing strategy, I'll run the numbers for your specific situation.
Christian Kosko | NMLS# 1415795 | Fairway Independent Mortgage Corporation
NMLS# 2289 | Equal Housing Lender | Licensed in DC, MD, VA
Seller-paid mortgage payments are available on VA, FHA, and USDA loans subject to seller credit limits, program guidelines, and lender approval. This does not apply to bond or down payment assistance loans. This page is for educational purposes only and does not constitute a loan approval or commitment. All loans subject to underwriting approval.