Builder Buydowns: The Hidden Discount in New Homes
What if a new-construction home came with a rate 2–3% below market—without the builder losing money? In this episode, Tim Lucas and Craig Berry reveal how homebuilders are leveraging massive interest-rate buydowns to keep prices stable and protect community values. You’ll learn:
- The Buydown Mechanics: How builders “eat” tens of thousands in profit—up to $34K per FHA loan—to permanently slash borrowers’ rates
- Incentive Shift: Why 80–85% of buyers now choose buydowns over fancy upgrades, and how 6.3% of a home’s price is being funneled into these deals
- Price vs. Rate: The appraisal magic that preserves a $500K price tag while delivering $30K in effective savings—keeping comps high and communities strong
- New vs. Existing Homes: Why a $500K new home at 6% can beat a $470K resale at 7.5%, saving buyers $250/month despite the lower sticker price
- Market Impact: How builder-affiliated lenders like DHI Mortgage and Lennar Mortgage are climbing the rankings—and what that means for your financing options
- Buyer Checklist: Three key factors—your timeline, rate forecasts, and renovation priorities—to decide whether to lock in a buydown or invest in permanent upgrades
If you’re shopping new builds, this episode gives you the insider strategy to navigate builder incentives and choose the deal that delivers real value—beyond just flashy finishes. Learn more at https://www.mortgageresearch.com/articles/builder-buydown-or-lower-price/
