How to Use Your Buyer Rebate to Buy Down Your Mortgage Rate

One of the most powerful things you can do with a buyer rebate in today’s market isn’t keeping the cash — it’s using it to permanently lower your mortgage interest rate. For most Triangle buyers purchasing in a high-rate environment, a rate buydown funded by your closing rebate can save tens of thousands of dollars over the life of the loan.

Here’s exactly how it works.

What is a mortgage rate buydown?

A mortgage rate buydown is a way of prepaying interest upfront in exchange for a lower interest rate on your loan. You pay a fee at closing — called discount points or simply points — and your lender reduces your interest rate in return.

One point equals 1% of the loan amount. On a $400,000 loan, one point costs $4,000. The rate reduction you get per point varies by lender and market conditions, but a common benchmark is approximately 0.25% rate reduction per point paid.

There are two types of buydowns:

Permanent buydown: You pay points at closing and your rate is reduced for the entire life of the loan. Every monthly payment for 30 years reflects the lower rate.

Temporary buydown: Your rate is artificially reduced for the first one, two, or three years of the loan, then steps up to the permanent rate. The cost of the temporary buydown is paid upfront at closing — typically by the seller or through closing credits.

Both types can be funded using your Sakan rebate.

How the rebate funds a buydown

When you purchase a home through Sakan Properties, we credit most of our commission back to you at closing — typically $3,000–$7,000 on a standard Triangle home purchase. That credit appears on your Closing Disclosure and can be directed toward discount points.

Here’s a practical example on a $450,000 home:

You paid nothing out of pocket for that buydown. The $6,750 came from a commission that was already built into the transaction.

Permanent vs temporary buydown — which is right for you?

The right choice depends on your specific situation and your view of where rates are heading.

Choose a permanent buydown if:

— You plan to stay in the home for at least 5–7 years
— You want certainty about your payment for the long term
— You don’t anticipate refinancing in the near future
— Rates are unlikely to drop significantly in the next 12–24 months

Choose a temporary buydown if:

— You believe rates will drop within the next 1–2 years and you plan to refinance
— You want lower payments in the early years of the loan while your income grows
— The seller is willing to fund the buydown as a concession
— Your rebate amount is better preserved for closing costs rather than permanent points

A 2-1 temporary buydown on a $400,000 loan at a 7% permanent rate gives you:

— Year 1 rate: 5% — monthly payment approximately $1,718
— Year 2 rate: 6% — monthly payment approximately $1,919
— Year 3+ rate: 7% — monthly payment approximately $2,129

If you refinance at the end of year 2 into a 5.5% rate, you’ve effectively had two years of significantly lower payments and then locked into a better permanent rate without ever paying the full 7%.

The cost of a 2-1 buydown on a $400,000 loan is approximately $6,000 — which falls squarely within the typical Sakan rebate range for that purchase price.

How to coordinate the buydown with your lender

This is important: a rate buydown needs to be discussed with your lender before you make an offer, not after. Here’s why.

Most loan programs limit the total closing credits — including your rebate, seller concessions, and any other credits — to a percentage of the purchase price. Conventional loans typically cap credits at 3–9% depending on your down payment. FHA, VA, and USDA loans have their own rules.

If you plan to use your rebate for a buydown, your lender needs to know upfront so they can structure the loan correctly and confirm the credit won’t exceed program limits.

At Sakan Properties, we coordinate with your lender from the start of the process to make sure the rebate is applied in the most beneficial way for your specific loan type and situation.

What lenders look for when applying closing credits to a buydown

Your lender will need to see the buyer agency agreement that documents the rebate amount before they can apply it to the loan structure. This is standard practice and not a complication — it simply means having your paperwork in order before you close.

The rebate must also appear on the Closing Disclosure as a line item credit. It cannot be paid outside of closing or handled as a side agreement. Every dollar is documented, disclosed, and approved by your lender before you sign.

This transparency is actually a feature, not a constraint. It means you know exactly what you’re receiving and how it’s being applied before you sit down at the closing table.

How much can you actually save?

The answer depends on your purchase price, the commission rate your seller or builder is paying, and your loan amount. Use our rebate calculator to see your estimated rebate, then talk to your lender about how many points that amount buys at current market rates.

As a general reference for Triangle purchases in 2026:

Estimates based on 2.5% buyer agent commission, 20% down payment, and 0.25% rate reduction per point. Actual results vary by lender and loan program.

One important note on tax implications

Discount points paid at closing are generally tax deductible in the year they are paid, subject to IRS rules and your specific tax situation. If your rebate funds the buydown, the deductibility of those points may apply to your return. Confirm the details with your CPA before closing — this is a common question for tax professionals in real estate transactions and not a complicated one.

The bottom line

In a high-rate market, every tool available to reduce your payment matters. A buyer rebate that funds a permanent rate buydown is one of the most efficient uses of closing credits available to Triangle buyers today — and it costs you nothing out of pocket.

If you’re buying a home in the Triangle and want to understand exactly how your rebate could reduce your interest rate, start with our rebate calculator or book a free 15-minute consultation with Sami directly.