For most of the past few years, the first question every buyer asked was simple: what's the rate? This fall, the better question might be: what else is on the table?
Rates have climbed again, and the headlines have followed. But the same reports describing a tougher borrowing environment also describe something buyers haven't seen in a while: room to negotiate. That shift is changing the conversation from the rate alone to the structure of the whole deal — and two tools come up again and again. Seller concessions and temporary buydowns aren't new, but they matter more in a market like this one. Here's how they work, in plain terms.
Why the conversation is shifting
According to Realtor.com's September 2026 housing report, 20.8% of active listings carried a price reduction — the highest September share since 2018 — while the number of homes for sale rose 5.4% from a year earlier. More homes on the market and more sellers adjusting their expectations means more sellers willing to talk.
A lower price is one way to meet in the middle. But it isn't the only way, and for some buyers it isn't the most useful one. That's where concessions come in.
What a seller concession actually is
A seller concession is money the seller agrees to contribute toward the buyer's costs at closing. Instead of reducing the sale price, the seller credits funds that can be applied to things like closing costs, certain prepaid items, or a rate buydown.
A few things worth knowing up front:
- It's negotiated in the offer. Concessions are written into the purchase contract, so the time to plan for one is before you make an offer, not after.
- Every loan program sets limits. How much a seller can contribute, and what it can be applied to, varies by loan type and the specifics of your transaction.
- It can't exceed actual costs. A concession covers eligible costs; it isn't cash back to the buyer.
For sellers, concessions can be appealing because the listed sale price stays intact. For buyers, a concession can put money exactly where it helps most.
The rate is one number. The structure of the deal is everything around it — and right now, more of it is negotiable.
How a 2/1 temporary buydown works
A 2/1 buydown is one of the most common ways concession dollars get used. The idea is straightforward: funds paid upfront temporarily reduce the interest rate for the first two years of the loan.
- Year one: the rate is reduced the most.
- Year two: the reduction steps down partway.
- Year three onward: the loan settles at its full note rate for the remaining term.
The buydown is typically funded at closing — often by the seller or a builder — and those funds are applied during the first two years. Two important details: borrowers generally still need to qualify at the full note rate, and the payment in year three and beyond is the payment to plan your budget around. Availability and guidelines vary by loan program.
Temporary buydown, permanent buydown, or a lower price?
These options can look similar on paper but solve different problems. A temporary buydown eases the first two years. A permanent buydown, through discount points, lowers the rate for the life of the loan. A price reduction lowers the amount you finance from the start.
Which one makes the most sense depends on questions only you can answer:
- How long do you expect to stay in the home?
- Are you comfortable with the full payment that begins in year three?
- Do you expect your income or expenses to change in the next few years?
One caution worth repeating: a temporary buydown shouldn't rest on the assumption that you'll be able to refinance later. Future rates, and your future eligibility, are never guaranteed.
Putting it into an offer
The smoothest version of this process starts with a conversation before you start touring. Talk with a loan officer about which options fit your loan program and goals, then work with your real estate agent on how to ask for them. A loan officer can lay out side-by-side scenarios — concession toward closing costs, a temporary buydown, points, or a price reduction — so you're comparing real options, not guesses.
Markets like this one reward preparation more than speed. Knowing what to ask for, and why, is a quieter kind of leverage — but it's leverage all the same.
Good to Know
This article is for general educational purposes only and is not an offer to lend or a commitment to any rate or terms. Seller concession limits, buydown availability, and eligible uses vary by loan program and transaction. All loans are subject to credit approval, underwriting, and program guidelines. Prequalification and preapproval are not a final loan approval. Talk with a licensed loan officer about your specific situation.