The builder will pay.
Pick what they pay for.

A lot of my work is with builders and developers, so I sit on both sides of this conversation. I see what builders are willing to give up, and I see buyers walk into a sales office and take whatever incentive is printed on the flyer.

Here is the part that costs people money. Right now most builders will give you something. The amount is usually negotiable. But the thing that decides whether it actually helps you is not the amount. It is what the money is spent on. The same dollars can be a price cut, a short term rate buydown or a permanent one, and those are three very different deals.

Builders are under real pressure

The National Association of Home Builders surveys builders every month. In September 2026, builder confidence fell to 32, down from 35 in August and the lowest reading since September 2025. In the West it was 28.

Inside that survey, 38% of builders said they cut prices this month, and the average cut was 6%. Two thirds of builders, 66%, were using some kind of sales incentive. The reason they gave is not complicated: buyer traffic is down because rates went up. The Freddie Mac 30 year average was 7.03% the week of 24 September, against 6.30% a year earlier.

Those are national numbers, not a Seattle measurement, and I want to be straight about that. But the builders I work with here are dealing with the same rate, the same carrying costs on finished inventory and the same buyers sitting on their hands. A finished house that does not sell costs a builder money every month it sits. That is your leverage.

Same money, three different deals

To compare them fairly I ran all three through the same house. These are my calculations, not a lender quote, and the assumptions are simple on purpose: a $1,000,000 home as a round example, 20% down, a 30 year fixed loan at 7.03%, principal and interest only.

At full price with no incentive, the loan is $800,000 and the payment is about $5,339 a month.

Option one, a price cut. Take the 6% average cut from the survey. The price drops to $940,000, the loan drops to $752,000, and the payment drops to about $5,018. That is $320 a month less, for all thirty years.

Option two, a temporary 2-1 buydown. The builder pays to lower your rate by two points in year one and one point in year two, then it goes back to the full rate. On the same $800,000 loan, your payment is about $4,309 in year one and $4,812 in year two. That saves $1,029 a month the first year and $527 a month the second year. From year three on, you save nothing. The builder's cost for that is the total of the payment differences, about $18,672.

Option three, a permanent buydown. The builder pays discount points at closing to lower your rate for the life of the loan. How far a given amount of money moves your rate is set by the lender on the day, so I cannot give you one honest number for it. What I can give you is the break even. On an $800,000 loan, a rate of about 6.43% produces the same payment as the $60,000 price cut at 7.03%. So if $60,000 of builder money buys your rate down by more than about six tenths of a point, the permanent buydown beats the price cut on the monthly payment. If it buys less than that, take the price cut.

Why the temporary buydown is the one they push

Look at those numbers from the builder's side. The 2-1 buydown makes the first year feel dramatically cheaper, and on this example it costs the builder roughly $18,672. A 6% price cut costs the builder $60,000, and it also lowers the price every appraiser and every future comparable sale in that neighborhood will see.

So a builder has two good reasons to steer you toward the temporary buydown. It is cheaper for them, and it protects the sticker price on the rest of the project. That does not make it a bad deal for you. It makes it a deal you should choose on purpose, not by default.

The honest case for the 2-1 buydown is a buyer who expects their income to go up, or who plans to refinance if rates come down. The honest case against it is a buyer who is qualifying at the edge of what they can afford. You are going to be making the full payment in year three. Budget for that number from day one, not the year one number on the flyer.

The refinance question nobody asks

There is one more thing that changes the math, and it cuts against the permanent buydown.

If you pay to buy your rate down permanently and rates fall two years later, you will probably refinance. The moment you do, the money spent on that lower rate is gone. You bought a thirty year discount and used two years of it.

A price cut does not disappear when you refinance. It is baked into a smaller loan balance, and a lower price usually means a lower assessed value and a lower property tax bill as well. So if you believe rates are more likely to fall than rise over the next few years, the price cut or the temporary buydown usually holds up better than the permanent one. If you believe you will keep this loan a long time, the permanent buydown gets stronger. Nobody knows which way rates go, including me, so be honest with yourself about how long you plan to keep the loan.

The limits you run into

You cannot ask a builder for unlimited money. Conventional loans sold to Fannie Mae cap what a seller or builder can contribute toward your costs, including rate buydowns. On a home you will live in, the cap is 3% of the price if you put down less than 10%, 6% if your loan is between 75% and 90% of the value, and 9% if it is 75% or less. On an investment property it is 2% no matter what.

Anything over those limits gets treated as a reduction in the sale price, and every contribution has to be disclosed to the appraiser. Your lender's program may be different, so check it. But the practical point stands: a buyer putting 5% down has far less room to take builder money toward the rate than a buyer putting 20% down, and that should shape what you ask for.

What it looked like on a real project

I had a nine unit development in Queen Anne that had been stalled for close to two years. Price was not the problem. The payment was. We restructured the offer around a 2% interest rate buydown instead of chasing the price down, and the project sold out.

The lesson from that one was the same thing the numbers above say. Buyers do not live in a price. They live in a payment. A builder who is willing to move the payment usually has more room than they are showing you on the price, and a buyer who asks for the right thing usually gets more than a buyer who just asks for a discount.

What I would actually do

• Ask for the incentive in dollars first. Do not accept a menu. Find out what the builder will actually spend, then decide how you want it spent.
• Get your own lender to price a permanent buydown with that dollar amount. If it moves your rate by more than the break even for your loan, it can beat the price cut. If not, take the cut.
• If you take a temporary buydown, qualify yourself at the full rate. Make sure you can carry the year three payment without it.
• Check your down payment against the contribution limits before you negotiate, so you do not win money you are not allowed to use.
• Compare the builder's preferred lender against an outside lender. A preferred lender incentive is only worth something if the rate and fees underneath it are competitive.
• Bring your own representation into the sales office. The person at the model home works for the builder. That is their job, and it is not the same job as looking out for you.

If you are looking at new construction anywhere in King, Snohomish or Pierce County, this is the part of the deal where the real money is, and it is the part most buyers never negotiate. When you want it run on your actual numbers, that is a conversation.