How Builders Buy Down Your Rate — and How You Can Get the Same Deal
You've seen the ads: "New homes from the 4s!" while the market rate sits a point or two higher. It's not a trick — it's a rate buydown. Once you understand how it works, you can use it to your advantage instead of just admiring the sign.
What a rate buydown actually is
Your interest rate isn't fixed by the universe — it's a starting point you can pay to lower. Lenders let you "buy down" the rate by paying discount points up front; roughly, each point (1% of the loan) buys the rate down a fraction of a percent. There are two flavors: a permanent buydown (pay points once, keep the lower rate for the life of the loan) and a temporary buydown like a "2-1" (lower for the first year or two, then it steps back up).
Here's the key: the builder is paying for it
When a builder advertises a low rate, they're usually paying those points for you — often through their preferred lender. That "4.99%" isn't magic; it's the builder spending some of their money to buy your rate down instead of cutting the sticker price. Why? A lower monthly payment sells homes while keeping the headline price intact. Which means that incentive is money on the table — and money on the table is negotiable.
How we negotiate it
A builder incentive is rarely one-size-fits-all. Depending on the builder and the moment, we can often decide whether it's best used as a permanent rate buydown, closing-cost assistance, or a price reduction. A permanent buydown is powerful if you're staying put; a price cut may matter more if you'll move in a few years. I help my buyers run that comparison so the incentive works for them.
Two things to watch
- The best rate usually requires the builder's preferred lender. That's common — but always compare to an outside lender so you know the buydown is real value.
- A resale can do this too. A motivated seller can pay points to buy your rate down — same mechanism, just negotiated by us.
Curious what a buydown would do for your payment on a Burleson home? Reach out and I'll connect you with a lender to run the numbers.
Rebecca Kennedy · Burleson Real Estate · 817-372-9896 · I'm a real estate agent, not a lender or financial advisor — confirm all rates and terms with a licensed lender.
