"What's the rate?" is the question buyers ask. "What can lower my cost?" is the better one, and there are more answers than most buyers know.
Three ways a buyer saves
Every program below helps in one of three ways. Knowing which problem your buyer has tells you which conversation to start.
Lower payment
For buyers who can close but are nervous about the monthly number.
Less cash to close
For buyers who can handle the payment but are short on upfront funds.
Lower long-term cost
For buyers planning to stay put who want savings that last.
Programs that lower the payment
2/1 Temporary Buydown
The effective rate is reduced by 2 percentage points in year one and 1 point in year two, then the loan runs at its full note rate. A lump sum set aside at closing covers the difference. It's often seller- or builder-funded, which makes it a strong negotiating tool.
Permanent Buydown (Discount Points)
Paying points at closing lowers the rate for the life of the loan. The CFPB notes points can make sense for buyers who plan to keep the loan a long time. How much each point lowers the rate depends on the lender, loan type and market, so the break-even point is a question for the LO.
One rule applies to temporary buydowns: buyers are generally qualified at the full note rate payment, not the reduced one. They're cash-flow relief, not a way to afford more house.
Programs that lower cash to close
Seller Concessions
The seller credits money toward the buyer's closing costs, prepaids or a buydown. Every loan type limits how much a seller can contribute, so confirm the cap with the LO before writing the offer.
Lender Credits
The reverse of points: the buyer accepts a slightly higher rate in exchange for a credit that reduces closing costs. It trades a higher long-term cost for less money upfront, which can be the right call for a buyer who expects to move or refinance.
Down Payment Assistance
State, local and nonprofit programs offer grants, forgivable loans or deferred second loans toward the down payment and closing costs. Each program sets its own income limits, purchase price limits and homebuyer education requirements, and funds can run out.
Community Lending Programs
Some lenders offer programs with grants or special terms for buyers who meet guidelines tied to income or property location. Efinity's loan officers can check whether a buyer or a home qualifies.
Builder Incentives
Builders frequently offer closing cost credits, buydowns or upgrades, sometimes with a preferred lender. Have the buyer compare the incentive's real value side by side before committing.
Programs for specific buyers
VA Home Loans
A government-backed program designed to lower the cost of buying for those who served, including no monthly mortgage insurance. A funding fee may apply, with exemptions for some borrowers. Ask every buyer if they or their spouse have served; many eligible buyers don't realize it.
Mortgage Credit Certificate (MCC)
Issued through state housing finance agencies, an MCC gives the buyer a federal tax credit for a portion of the mortgage interest they pay each year, for as long as the home is their primary residence. Income and price limits apply, and the benefit depends on the buyer's tax situation, so they should talk to a tax advisor.
- "The payment scares me." Ask about a 2/1 buydown.
- "I'll be here 15 years." Ask about a permanent buydown.
- "I don't have much saved." Ask about assistance programs, concessions and lender credits.
- "My dad was in the Navy." Ask whether the buyer or their spouse ever served.
- "This is my first home." Ask about first-time buyer programs and an MCC.
- "The seller won't drop the price." Ask about a credit instead.
Stacking: what works together
The biggest savings often come from combining options, such as an assistance program plus seller concessions, or a buydown plus closing cost credits. A few things to keep in mind:
- Seller money shares one cap. A seller-funded buydown and seller-paid closing costs count toward the same contribution limit.
- Assistance programs have their own rules. Some limit which loans, credits or other programs they can be combined with.
- Order matters. Bring the LO in before the offer so the strategy is built into the contract, not patched in after.
Putting the 2/1 buydown into an offer
When a seller is willing to give, the money can go toward a price reduction or a buydown credit. A price cut lowers the loan amount for the life of the loan but spreads the savings thin. A 2/1 buydown concentrates the savings into the first two years and keeps the sale price intact for the seller.
- Call the LO first. The cost depends on the loan amount and note rate. Ask for the exact credit and a side-by-side of price cut vs. buydown.
- Write it as a seller credit toward a temporary rate buydown, using your state's contract and your broker's guidance on wording.
- Check the cap. Make sure the buydown plus any closing cost credits fit the loan's contribution limit.
- Keep everyone aligned. Buydown terms go into a written agreement and the loan file. The contract, lender and escrow should all show the same numbers.
On your listings, a seller credit toward the buyer's rate buydown can draw attention without another price cut. Mention it in plain terms, leave rates and payments out of the marketing and check your MLS rules on how concessions can be shown.
Conversation starters
"Besides the rate, is your bigger worry the monthly payment or the cash you need at closing? There are different programs for each, and your loan officer can show you which ones fit."
"Have you or your spouse ever served in the military, and have you owned a home in the last few years? Both can open up programs worth asking about."
"Instead of another price drop, what if we offered a credit toward the buyer's rate buydown? It keeps your price intact and gives buyers a reason to look now."
You don't need to know every guideline. You need to know these programs exist and bring in the loan officer before the offer, so your buyer sees every option.