Ways to Lower Your Interest Rate When Buying a Home

Buying a home is exciting — but if you’ve been watching interest rates, you know they can make a big difference in your monthly payment. The good news? There are ways to lower your rate, even if today’s market rates feel high. One of the most common is called a rate buydown.

What Is a Rate Buydown?

A rate buydown is when you pay extra money up front (or use a credit from your lender, seller, or builder) to “buy” a lower interest rate on your mortgage.

Think of it like a game with the mortgage company:

• The more money you give up front, the lower your rate goes.
  

• That lower rate means smaller monthly payments, which can save you money over time.
  

Example of How It Works

Let’s say you’re approved for a 30-year mortgage at 7% interest.
Your lender offers a $5,000 credit (or you get this from the seller or builder).
You decide to use that credit for a permanent rate buydown.

The result? That $5,000 might lower your interest rate to 6.5% — and that small change could save you hundreds of dollars every month.

Who Offers Buydowns?

• Builders often use this as an incentive to attract buyers.
  

• Sellers may offer a credit toward a buydown to make their home more appealing.
  

• Lenders can sometimes structure your loan so part of your closing costs go toward lowering your rate.
  

Other Ways to Lower Your Rate

• Put more money down: Larger down payments often qualify you for better rates.
  

• Shop around: Compare lenders — even a small difference can add up over time.
  

• Consider temporary buydowns: These lower your rate for the first 1–3 years, giving you breathing room until you refinance or your income increases.
  

What If Rates Drop Later?

You’re not stuck forever. If rates go down, you can refinance your mortgage to take advantage of the new lower rate.

Bottom Line

In today’s market, you don’t have to accept the first rate you’re offered. With the right strategy, you can lower your rate and your monthly payment — and get into the home you love without waiting for the “perfect” market.

📲 Thinking about buying? We’ll help you explore your options to make it more affordable, from rate buydowns to smart negotiation strategies.