With the affordability challenges in today’s housing market, every dollar counts. The new-home market offers a distinct advantage over the resale market: mortgage rate buydowns.
Builders are using these buydowns to help cover part of the cost, thereby lowering your interest rate. That lower rate can result in significant monthly savings, shaving hundreds of dollars off your mortgage payment. According to Freddie Mac, the average 30-year fixed mortgage rate has oscillated between 6% and 7% for the past year. In this rate environment, builder support and rate buydowns can make all the difference.
What Do Rate Buydowns Look Like in Practice?
As of early June 2025, the average 30-year fixed mortgage rate is 6.9%, according to the Federal Reserve Bank of St. Louis. With a builder buydown, your rate could be much lower.
For example, if you are buying a new home priced at $407,200 and putting 10% down:
Your monthly principal and interest would be about $2,414 with a 6.9% mortgage rate.
Your monthly payment drops to about $2,1012 with a buydown to a 5.2% rate. This translates to savings of about $400 per month, or $4,800 per year.
With a buydown to 4.8%, your monthly payment could decrease to approximately $1,923, resulting in a savings of nearly $490 per month and nearly $5,880 per year.
Not only can these kinds of savings make a real difference for your day-to-day budget, but the rate buydown may help your ability to qualify for a mortgage in the first place.
“If you’re shopping for a home, ask about buydowns,” says Ali Wolf, chief economist for NewHomeSource. “A home that looks out of reach with today’s rates might fit your budget when builder incentives are factored in. Not every builder offers them, but many do, and the savings could be well worth the conversation.”
What Rates Are Builders Offering?
Zonda survey data indicates several trends for the extent to which builders across the country are buying down rates. Here are a few takeaways from the May 2025 data:
High 4%: The most common buydown rate in the current market is to one in the high 4s, with 30.1% of builders saying they can get buyers down to this rate.
Low to Mid 5%: In May, 28.6% of builders can buy down rates to this range (17.3% offering low 5% rates and 11.3% offering mid 5% rates).
6% or Higher: Rate buydowns to this level are far less common, with just 5.3% of builders offering buydowns in this range. The Midwest is the leading region for these rates, with one-third of builders offering buydowns of 6% or greater.
No Buydowns: While many builders can offer buydowns, 14.3% of builders surveyed by Zonda said they are not offering any buydowns. More than half of builders in the Northeast reported that they do not offer rate buydowns.
As the data indicates, buydown structures vary depending on the specific company or region. However, most builders are offering one to two percentage points of rate relief compared to the typical resale purchase.
For home shoppers in the new-home market, there is more good news: 94.2% of builders surveyed by Zonda offering buydowns are doing so on fixed-rate mortgages. This means that you are able to lock in a lower rate for the life of the loan, not just the first couple of years. As a result, buyers gain long-term peace of mind in addition to upfront savings.
