Yes, You Can Still Afford to Buy a Home.....Here’s How
Why Now is Still the Right Time to Buy a Home, Even with Higher Interest Rates
If you’ve been thinking about buying a home but have hit the pause button because of
higher interest rates, you're not alone. Many buyers are sitting on the fence, hoping rates
will drop before making a move. But here’s the reality: trying to perfectly time the
market can mean missing out on opportunities today that could benefit you long term.
Yes, rates are higher than they were during the ultra-low period of 2020–2021, but
waiting for the “perfect” rate may cost you more in rising home prices, competition, and
missed equity gains. [When the rates do drop, the competition for homes will be fierce,
just like during Covid] The good news....There are smart ways to make homeownership
more affordable right now, even with current rates.
Here is how you can take advantage of interest rate buydowns to lower your monthly
payment and get into the home you want now.
What is a Mortgage Interest Rate Buydown?
An interest rate buydown is when the interest rate on your mortgage is reduced for a set
period of time or even permanently, usually through an upfront payment. The cost of the
buydown can often be negotiated with the seller, especially in a market where homes
are sitting a bit longer and sellers are motivated. THIS IS NOW!
Seller-Paid Buydowns: A Negotiation Tool
Instead of asking the seller for a price reduction, you can negotiate seller concessions to
help buy down your interest rate. This benefits you by lowering your monthly payment
now, which is often more impactful than a slightly lower purchase price.
Example:
Let’s say you’re buying a $600,000 home. Instead of asking for a $15,000 price cut, you
ask the seller to contribute $15,000 toward a rate buydown. This could significantly
reduce your monthly payment for the first few years or even permanently.
3 Common Interest Rate Buydown Options Lenders Are Offering Today
1. 2-1 Buydown
This is one of the most popular buydowns available right now.
• Year 1: Your rate is 2% lower than the note rate.
• Year 2: Your rate is 1% lower than the note rate.
• Year 3 and beyond: Your rate goes to the full note rate.
Example: If your final rate is 6.75%, you’d pay 4.75% in Year 1, 5.75% in Year 2, and
6.75% from Year 3 onward. The buydown is paid upfront, often by the seller as part of
your offer.
2. 1-0 Buydown
• Year 1: Your rate is 1% lower.
• Year 2 and beyond: Full note rate applies.
This is a lower-cost option than the 2-1 buydown but still offers meaningful savings in
your first year of homeownership.
3. Permanent Rate Buydown
Instead of lowering the rate temporarily, you can pay points upfront to permanently
reduce your rate.
• 1 point typically equals 1% of your loan amount.
• Each point might lower your interest rate by 0.25% (varies by lender and market).
This can be negotiated as a seller credit and is great for buyers planning to stay in the
home long-term.
Final Thoughts: Focus on Monthly Affordability, Not Just the Rate
Higher interest rates have certainly changed the conversation, but they don’t need to
derail your homeownership goals. With creative strategies like buydowns and a strong
negotiating team on your side you can still buy smart in this market.
And don’t forget: you can always refinance if rates come down in the future. But the
home you fall in love with today might not be there tomorrow.
Let The Cutka Team Help You Buy Smart
Navigating interest rates, negotiations, and seller concessions can feel overwhelming,
but you don’t have to do it alone. The Cutka Team has helped countless buyers like
you strategize smart purchases even in shifting markets.
Contact us today to schedule your free buyer consultation and learn how to make these
buydown strategies work for you!
Let’s get you moving with confidence, interest rates and all.
___________________________________________________________________