Freddie Mac's national average for a 30-year fixed mortgage reached 7.03% on September 24, 2026, up from 6.95% the week before and 6.30% a year earlier. That does not mean every buyer is quoted 7.03%, but it does make the structure of your offer more important. In some cases, asking the seller to fund a rate buydown can reduce your payment more than using the same dollars for a modest price cut.
Rates, lender pricing and loan rules change. Have your lender compare these options using your credit, down payment and actual property before you write an offer.
Why a small price cut may not change the payment much
A lower purchase price helps for the life of the loan, but a few thousand dollars spread across 30 years often produces a modest monthly difference. Applying that money to discount points or a temporary buydown may create a larger payment reduction, especially early in the loan.
Neither option is automatically better. A permanent rate buydown can take years to break even. A temporary buydown expires. A price reduction keeps lowering the balance for as long as you own the loan. Ask your lender to show the monthly payment, cash due at closing and break-even point for each version.
Four ways to use the same negotiating dollars
| Option | What it does | May fit buyers who | What to watch |
|---|---|---|---|
| Price reduction | Lowers the purchase price and loan amount | Expect to keep the home and loan for a long time | The monthly change may be smaller than expected |
| Temporary 2-1 buydown | Reduces the effective rate by 2 points in year one and 1 point in year two | Want lower early payments and can afford the full payment later | The payment rises in years two and three |
| Permanent buydown | Uses discount points to reduce the rate for the life of the loan | Expect to keep the loan beyond the break-even point | The upfront cost may be wasted if you refinance or sell soon |
| Closing-cost credit | Covers eligible closing expenses so you keep more cash | Want to preserve savings for repairs or moving | Limits depend on the loan, occupancy and down payment |
Why sellers may be open to a credit
Redfin reported that 44.7% of U.S. home sales in the three months ending August 31 included a seller concession, up from 42.6% a year earlier. Its definition includes help with repairs, closing costs or a mortgage-rate buydown, but not a list-price reduction. That is national data, not a promise that a specific San Diego seller will agree.
A home that has been sitting or already had a price change may offer more room to negotiate. A new, well-priced listing may not. Review recent comparable sales and the seller's position before deciding what to request. Our San Diego price-reduction guide explains what to look for.
Seller-credit limits depend on the loan
These are broad program limits, not a quote for your transaction:
- Conventional loans: Fannie Mae allows financing concessions from 3% to 9% for a primary residence or second home, depending on the loan-to-value ratio. Investment properties are generally limited to 2%.
- FHA loans: interested-party contributions are generally limited to 6% of the sale price.
- VA loans: the 4% limit applies to specific seller concessions, not every ordinary closing cost a seller may pay. VA rules separate the two categories, so have a VA-experienced lender structure the request.
A credit also cannot exceed eligible costs just because the percentage cap is higher. Your lender and escrow team need to confirm how much can actually be used.
How to ask for a buydown
First, have your lender price the options before you write the offer. Ask for a specific dollar amount, not general help with costs. Confirm that the property and loan program allow the proposed structure, and make sure the appraisal and final contract disclose the concession correctly.
A seller credit does not simply disappear from the transaction record. Appraisers review concessions and may adjust comparable sales when a concession affected the price. A lower contract price and a seller credit are treated differently, but both must be documented.
What a 2-1 buydown will not do
A 2-1 buydown does not change the note rate. Funds are set aside at closing to cover the difference during the first two years. In year three, the payment reaches the full note-rate amount.
If the home only feels affordable during the discounted period, it is not affordable yet. Qualify and budget around the full payment. Refinancing later may be possible, but it is never guaranteed.
Run the numbers before you decide
Use our mortgage payment calculator to compare payments, then try the buy now or wait calculator for a longer view. If you want help shaping the offer around a real San Diego home, email Celeste.
Frequently asked questions
Is a rate buydown better than a lower price?
It depends on how long you expect to keep the loan. A price cut lowers the balance permanently. A permanent buydown may save more each month but needs time to recover its upfront cost. A temporary buydown gives larger early savings, then expires.
Can a seller pay my closing costs?
Often, yes. The usable amount depends on your loan program, down payment, occupancy and actual eligible costs. Your lender should confirm the cap before the offer is written.
What is a 2-1 buydown?
It is a temporary payment subsidy. The effective rate is 2 percentage points below the note rate in year one, 1 point below in year two and the full note rate from year three forward.
Should I wait for rates to drop instead?
Nobody can time mortgage rates reliably. Compare buying now with waiting, and make sure today's full payment works without depending on a future refinance.