Say a seller agrees to give a buyer $10,000 at closing. On paper the money is the buyer's. But whether all $10,000 can actually be used depends on two things the seller has no control over. One is how much the buyer is putting down. The other is how little it costs to close a home purchase in North Dakota.
That matters more this fall than it has in a while. Freddie Mac's weekly average for a 30-year fixed mortgage went from 6.71% on Sept. 3, 2026 to 7.40% on Oct. 8 and Oct. 15, then eased to 7.24% on Oct. 29. At the same time, the FM Realtors comparison data through Sept. 30, 2026 shows the average sold price at $374,987, up from $357,041 a year earlier. Average days on market rose from 77 to 85 over the same period. Prices went up while homes took longer to sell. The way those fit together is in the credits.
A price that rises while homes sit longer
That FM Realtors data covers the whole RMLS service area. That's Cass, Richland, Ransom and Sargent counties in North Dakota and seven Minnesota counties, Clay included, so it's broader than the city of Fargo. Through Sept. 30, 2026, the area recorded 3,726 homes sold against 3,600 a year earlier, and 5,151 pended listings against 4,982. Buyers are still buying, but each sale is taking longer to get there.
When homes take longer to sell and rates jump, the seller usually gives some ground somewhere. Cutting the price shows up on the record, and it lowers the comparable sale for every neighbor who lists next. A credit at closing leaves the sale price where it is. The seller nets less, the buyer pays less, and the sold price in the data looks unchanged. In a market that leans on credits, a rising average sold price can overstate what sellers actually took home.
Builders are making the same choice in plain view. Through Nov. 30, 2026, Jordahl Custom Homes is offering $10,000 toward closing costs or a rate buydown, plus $15,000 in Design Center upgrades, on fresh-dig, spec and model homes across the Fargo-Moorhead area. Twin homes are excluded and the offer can't be combined with other promotions. Thomsen Homes advertises a 5.49% interest rate and "up to 26K off" a new home on its incentives page. Neither builder is advertising a lower base price. Each puts part of the money toward the loan and part toward upgrades.
The rule that caps the credit
The ceiling comes from the loan. Under the Fannie Mae Selling Guide's interested party contribution rules, the maximum financing concession on a primary residence depends on loan-to-value. That means it depends on the down payment. The cap is figured on the lower of the sales price or the appraised value.
Here's how those tiers look at the service area's average sold price through Sept. 30, 2026:
| Buyer's loan-to-value | Fannie Mae cap | Cap on a $374,987 sale |
|---|---|---|
| Above 90%, less than 10% down | 3% | about $11,250 |
| 75.01% to 90% | 6% | about $22,500 |
| 75% or less, 25% or more down | 9% | about $33,750 |
| Investment property, any ratio | 2% | about $7,500 |
Government loans work differently. HUD's FHA guidance lets interested parties contribute up to 6% of the sale price, and it counts permanent and temporary rate buydowns inside that 6%. According to the VA's closing cost page, seller credits for loan closing costs aren't capped. Seller concessions, such as paying the funding fee or paying off the buyer's debt, are capped at 4% of the home's reasonable value.
On a primary residence or second home, the buyer with the smallest down payment, who usually needs the most help, has the lowest ceiling.
Why a $10,000 credit is hard to use in North Dakota
There's a second limit in the Fannie Mae rules. Financing concessions have to be equal to or less than the buyer's actual closing costs. Anything over that is treated as a sales concession. It comes off the sales price, and the loan-to-value gets recalculated. Costs a seller customarily pays under local custom don't count against the cap.
In North Dakota, the buyer's closing costs are small:
- No transfer tax. The Tax Foundation's 2026 state tax index lists North Dakota as having no state real estate transfer tax.
- Low recording fees. The Cass County Recorder's fee schedule charges $20 for a document of one to six pages and $65 for seven to 25 pages.
- A low statewide average. Bankrate's state table puts average purchase closing costs in North Dakota at $2,243, or 0.69% of the average sale price, taxes included. That figure comes from LodeStar data on 2024 quotes. LodeStar counts fees, recording charges, transfer taxes, settlement and escrow fees, and title policies. It put the national average at $4,661, or 1.06% of price. LodeStar also found that closing costs as a share of price run lower in states with little or no transfer tax.
Moorhead shows the difference. Across the river, Minnesota charges a state deed tax of 0.33% of the sale price and a mortgage registry tax of 0.23% of the loan amount. Clay County doesn't add the Hennepin and Ramsey surcharge. The same purchase comes with a bigger bill of closing costs on the Minnesota side, so a credit has more line items to cover there.
Here's how a $10,000 credit plays out on a Fargo purchase:
- Third-party costs like title, recording and settlement fees take a few thousand dollars, roughly in line with the $2,243 statewide average.
- Prepaids such as escrow deposits and prepaid interest can take more, and Fannie Mae counts prepaids as closing costs.
- Whatever is left needs a home. If nothing absorbs it, the overage becomes a sales concession and comes off the sales price.
- Discount points that buy down the rate are the line item that can absorb a large remainder. That explains why Jordahl's offer reads "closing costs or a rate buy down," and why FHA counts buydowns within its 6% cap.
So with low closing costs and rates above 7%, a large credit in Fargo has two places to go. It goes toward buying down the rate, or it comes off the sales price.
Who moves first when rates sit above 7%
Resale supply is part of the reason. In InForum's Sept. 25, 2026 report on rising mortgage rates, Concordia College economics instructor Riaz Aziz linked thin inventory to owners holding on to the low rates they locked in years ago:
"The fact that we had a 3% mortgage rate on a 30-year rate just five years ago tells me that the inventory for new home buys, if you bought in the last five to 10 years, you're very unlikely to want to sell that home."
That leaves builders holding much of the available stock, and a builder can pay for a buydown out of its margin without changing the price its other homes are compared against. A resale seller is comparing a credit against a price cut on a single house.
For first-time buyers there's also a state option. In the same InForum report, North Dakota Housing Finance Agency executive director Brandon Dettlaff said FirstHome rates were "in the low sixes." As of Nov. 2, 2026, NDHFA's posted rates list FirstHome at 6.200% or 6.450% on government loans and 6.450% or 6.700% on conventional loans, depending on the origination fee and points option chosen. FirstHome is for buyers who haven't owned a principal residence in the past three years. The purchase limit is $500,000, and income limits are $105,730 for households under three and $121,590 for households of three or more. The agency's down payment and closing cost assistance is 3% of the first mortgage and can't be combined with another assistance program. A buyer who starts at a lower rate needs less buydown, which changes how much of a seller's credit goes toward points.
This is general information about how these loan rules work, not legal, tax or financial advice. Your lender and closing professional can tell you which caps and costs apply to your loan.
A few direct questions
Does a seller credit lower the sale price on record? Not when it stays within the loan's limits. The recorded price stays the same and the seller's proceeds go down by the amount of the credit. A credit that goes over the cap or over the buyer's closing costs gets deducted from the sales price under Fannie Mae's rules.
Is the credit cap based on the price or the appraisal? Fannie Mae figures it on whichever is lower, so a low appraisal also lowers the maximum credit.
Who pays for title insurance in North Dakota? The North Dakota Insurance Department says lenders nearly always require a lender's policy. The owner's policy is optional, and who pays for it can be negotiated.
If you're pricing a Fargo home for this winter, a list price alone won't tell you what you'll net. Our team at Up North Realty Group builds each valuation from recent comparable sales, credits included, so you'll know ahead of time what a $10,000 concession would cost you compared with a price cut. Get Your Home's Value.
