As new construction housing inventory is much higher than many builders would like it to be, home builders have strategized selling their inventory by offering incentives to potential homebuyers. One of the most notable or recognized may be the mortgage benefits offered currently by home builders.
Looking at a few statistics, the average mortgage rate that new construction homebuyers were able to secure was 5.27% during the third quarter of 2025. Homebuyers purchasing resale homes had an average interest rate of 6.26%. This is significantly lower. Some real estate experts are amazed at just how much lower an interest rate homebuyers are able to secure when purchasing new construction right now. But even though these deals seem incredibly beneficial and tempting, buyers need to make sure that they look at all of the details of their home purchase to make sure that there is no catch.
What Should Buyers Look Out for When Considering New Construction Builder Incentives?
Large national new construction home builders are able to operate their own arms mortgage lending companies. Most buyers who need a mortgage borrow the money from the builder’s in-house lender. This is where buyers need to make sure they pay special attention to the deal they are signing up for. As the new construction builders have very tight and secure relationships with the lender, it allows them to offer discount mortgage prices as they help each other to conduct business. It is easier for a builder to offer a discounted mortgage rate than to discount the price of the home, as it makes a lesser impact on their ability to sell the rest of their inventory without discounted pricing. New construction builders would much rather help with an interest rate buy-down than reduce the list price of the property. Reducing the list price of a property often translates to reducing the list price of many more properties.
This may not always be the most beneficial trade-off that homebuyers think it is. Sometimes it could be better to go with a lender outside of the incentivized, lower mortgage rate offering. Sometimes it can save a homebuyer more money to not go with the new construction builder’s financing. While the lower interest rate is enticing. It is best for homebuyers to do some detailed math in figuring out if taking the help with a mortgage rate buy-down is worth using a lender that is building a strong relationship with the home builder. Sometimes, homebuyers can benefit from shopping around and discovering other mortgage loan products while negotiating the list price of the property.
Sometimes these rate buy-downs are truly beneficial, but it is always best to make sure that you are doing all of the math. It may seem crazy, but sometimes it might be more beneficial to make sure you have a lender that is a true third-party and is working in your interest as their sole customer and client, not arm in arm with the builder. You want to ensure that they are going to give you the best service possible and are truly working to earn your business and satisfaction, not distracted by continuing a relationship with a builder. Some of these builder incentives are a good idea, and some of them homeowners need to be reluctant and careful of who they are signing on a mortgage loan with.
Another thing to be aware of is that rate buy-downs are temporary. This means that they only pull the mortgage rate down for a set amount of time. This is where reading all the details of your loan is incredibly important. This rate is not purchased into your mortgage forever. It is just a temporary lower rate. Your rate will increase back to the average rate after a specific period of time. Most often, this is about one to two years. After this point, the interest rate increases, and so does your monthly payment. Don’t get caught up in securing the lower rate and forget that it is only for a short amount of time.
When you are ready to buy a a Sunset Beach home, whether a new construction home or existing home, the team at Sunset Beach and Beyond is here to help you find the best home that fits you and your needs. You want an experienced Sunset Beach real estate agent at your side who knows the details of searching for homes in the right places in Sunset Beach to help you find exactly what you are looking for.
“Amy and I have bought and sold four properties in the past twelve years. Both of you are the best realtors we have ever dealt with. Amy and I both felt we could trust you to look out for our interest. The level of service you provided was outstanding, from taking the trash out, helping the buyer with inspecting the irrigation system, dealing with our tenants, always being there if we needed to ask a question, providing constant updates on the market and always keeping us informed on the sale of our house. I think your next venture should be training other realtors, because both of you have mastered the art of providing excellent service. I will be sure to recommend the Frank and Karen team to anybody looking for a trust worthy, knowledgeable and top performing realtor. It was a pleasure working with both of you.” Sunset Beach and Beyond testimonial