Builder Incentive Calculator: Price Cut vs Rate Buydown
Builders are committing 7 to 10% of the sale price to incentives, but a dollar of buydown is not worth a dollar of price cut. Enter the deal on the table and see what each option really does to your payment, your cash to close, and your five-year cost.
The deal
Incentives to compare
What each is worth
Why the same builder dollars buy different value
A permanent rate buydown attacks the interest you would pay across the life of the loan, so each builder dollar spent there typically moves your monthly payment more than the same dollar as a price cut. The price cut fights back on other fronts: it lowers your loan balance and builds equity, trims documentary stamps and title costs, and can lower your property taxes since Florida assessments track price. A closing credit does not touch the payment at all, but it is dollar-for-dollar the strongest option if the binding constraint is cash to close. A 2-1 temporary buydown is the cheapest for the builder and helps only the first two years — run the numbers before treating it as equal to the others.
One more thing the incentive does that a price cut does not: it stays out of the recorded sale price. Public price data can look stable while builders concede 7 to 10% through the back door — the dynamic our shadow inventory analysis documents with sourced industry data.
Common questions
Is a rate buydown better than a price cut?
For monthly payment, a permanent rate buydown usually beats a price cut of the same cost to the builder, often two to three times over. A price cut builds slightly more equity and lowers doc stamps and taxes. This calculator shows both for your exact numbers.
What is a 2-1 buydown?
The builder prepays interest so your rate is 2 points lower in year one and 1 point lower in year two, then returns to the note rate. It helps near-term cash flow but you must qualify at, and eventually pay, the full rate.
How big are builder incentives in 2026?
Industry surveys show 63% of builders offering incentives in July 2026, the sixteenth straight month above 60%, with packages commonly worth 7 to 8% of the sale price. PulteGroup reported incentives of 10.9% of gross sales price in Q1 2026, per its public filings.
Are builder incentives negotiable?
Often, yes, especially on standing inventory the builder wants off the books before quarter end. The incentive may be tied to using the builder's preferred lender, so compare that lender's rate and fees against outside options before valuing the package.
Does a price cut show up in public data but an incentive does not?
Largely yes. A price cut changes the recorded sale price; a rate buydown or closing credit mostly does not. That is why published prices can understate how much builders are really conceding, a dynamic covered in our shadow inventory analysis.
Negotiating new construction? Check the county cost picture first: rent vs buy by county, what your property taxes will actually be after buying, and the mortgage payment calculator.
Estimates only. 30-year fixed amortization; permanent buydown cost estimated at one discount point per 0.25% of rate, an industry rule of thumb that varies by lender and market; 2-1 buydown cost computed exactly as the prepaid payment differential. Incentive availability, lender requirements, and tax treatment vary by builder and buyer. Industry statistics: NAHB monthly surveys and PulteGroup Q1 2026 filings, as published. Not financial advice. Equal Housing Opportunity.